FACT BOX: Minor metals on Fanya

The Fanya Metal Exchange was established in Kunming, China in April 2011 as a spot trading exchange for minor metals, providing a link between local producers and private investors.

The Fanya Metal Exchange was established in Kunming, China in April 2011 as a spot trading exchange for minor metals, providing a link between local producers and private investors.

Metal Bulletin reviews the history of Fanya after a week of tumultuous events at the exchange.

After years of low domestic demand and weak exports, Chinese producers were happy to deliver on to the exchange, where they could secure higher prices.

In early 2013, Metal Bulletin reported that indium was changing hands on Fanya for 40% more than in the sport market, as interest from China’s private investors continued to prop up demand, even if end users were not.

The exchange created a “haven for indium producers in China” with bismuth and germanium also trading at a premium over Chinese domestic spot prices.

Fanya became a market of first resort for some China-based minor metal producers, capitalising on its higher values compared to the spot market, and in 2013 and most of 2014, the minor metals market became less reflective of fundamentals, as higher prices were realised on Fanya. 

This price discrepancy is most pronounced on indium, where the value of Fanya’s frozen stock is currently seven times higher using prices quoted by the exchange, compared to calculations using Metal Bulletin’s assessment.

Using prices quoted by Fanya, the value of bismuth and germanium is 60% and 40% higher respectively.

Metal Fanya inventory MB price
(mid-range)
MB value
(RMB)
MB value
(US$)
Indium
China domestic min 99.99% RMB/kg
3,629,460 1,990 7.22 billion 1.2 billion
Germanium
China domestic min 99.99% RMB/kg
92,310 10,000 923 million 150.6 million 
Bismuth
China domestic min 99.99% RMB/tonne
19,228.05 81,000 1.56 billion 254.1 million

Metal Fanya inventory Fanya price Fanya value
(RMB)
Fanya value
(US$)
Indium
China domestic min 99.99% RMB/kg
3,629,460 14,285.70 51.8 billion 8.5 billion 
Germanium
China domestic min 99.99% RMB/kg
92,310 14,159.5 1.3 billion 213.3 million
Bismuth
China domestic min 99.99% RMB/tonne
19,228.05 129,701 2.5 billion 407 million

MB prices from July 10
Fanya specification may vary from MB specification

As prices increased, so did Fanya’s stockpiles.

The bourse’s indium inventory exceeded 1,000 tonnes in May 2013, and is currently frozen at around 3,600 tonnes – nearly four and a half years’ worth of annual production. Similarly, the exchange’s bismuth stocks equate to over two years’ global production. 

 

Metal Fanya inventory
(tonnes)
Global annual production (tonnes) Inventory as % of annual production
Indium  3,629.46 820 443%
Germanium 92.31 165 56%
Bismuth 19,228 8,500 226%

Global annual production figures from the US Geological Survey, estimated 2014

In April last year, Fanya made an unsuccessful application for Minor Metals Trade Association membership, sparking fierce debate among market participants as some called for the exchange to operate with more transparency.

In October last year, Metal Bulletin learnt that Fanya board members Zhang Peng, Shan Jiuliang and Wen Di had joined the board of animated film company Imagi International. In its 2014 annual report, the studio then revealed plans to develop a major commodities trading platform and a related internet-based finance business, as it undertook a review of how to use its surplus cash. It was not confirmed whether the platform to be developed was Fanya.

Uncertainty arose towards the end of 2014 after regulators requested that the exchange make changes to its trading rules, and then stopped stockpiling metal while stocks were inspected.

In May this year, Fanya launched a new online financing platform called Fanrong, providing asset management products based on exchange-listed minors.

In September this year, the exchange plans to launch a new trading platform based in Xiamen, designed to appeal to international investors. Fanya officials have encouraged concerned investors to shift their interest to either of these new platforms.

Today, Fanya has around 220,000 investors, “but at the moment only about 60,000 are active,” a source close to the exchange told Metal Bulletin.

Its partners include Yunnan Tianhao Rare Precious Metals Company, 5N Plus, Guangdong Vital, Jiangsu Cobalt Nickel Metal Company, Guixi Sanyuan Metals and Zhuhei SEZ Fangyuan, the exchange said.

Fanya’s banking partners include China CITIC Bank, Bank of China, Industrial and Commercial Bank of China, Sino-Australian International Trust and China Construction Bank, according to a list on Fanya’s website.

editorial@metalbulletin.com

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