Vital Materials emerged as biggest buyer of Fanya minor metal stocks

SHANGHAI, Feb 15 (SMM) – Vital Materials, one of the biggest minor metals producer in the world, turned out to be the mystery buyer of several batches of minor metals stocks previously held by the now-defunct China’s Fanya Metal Exchange, including six years’ global supply of indium.

The Guangdong-based minor metals giant is found to be the controller of Kunming Rongke New Materials—the winner of five of the online auctions of the Fanyan stocks. On January 18, Kunming Rongke won the auction of 3,609 mt of indium metal stocks, the last batch of minor metals formerly held by the Fanya Metal Exchange with a bid of 2.85 billion yuan. Kunming Rongke was only established in September 2019 and the lack of information on the company sparked speculation as to the fate of Fanya inventories.

Vital Materials is a company specialising in minor metals and R&D, production, sales and recycling services of high-end materials. It is a high-tech enterprise recognised by the state, having the National Engineering & Technology Research Center of Scattered Metals. It also has a technology centre that is recognised by the state and an independent advanced materials research institute. Its products are widely used in photovoltaics, LED, infrared materials, electronic communications, aerospace, pharmaceutical, ceramics, and more.

Vital is the world’s largest producer of selenium and tellurium, and produces gallium, indium, germanium and other minor metals as well. It is also a significant producer of chemicals with subsidiaries in Europe, North America, South America and elsewhere in Asia. Vital’s long-term strategies include becoming fully integrated in indium and grow its leading position in finished products.

Acquisitions made by Vital Materials in Fanya metal auctions

Vital Materials, under its own name or through Kunming Rongke, paid a total of 4.2 billion yuan in winning Fanya auctions. 

October 28, 2019

Vital, through Kunming Rongke, bought 337.8 mt of selenium at a price of 91,600 yuan/mt. 

Vital, under its own name, bought 170 mt of tellurium at a price of 305,600 yuan/mt. 

Vital, through Kunming Rongke, bought 92.31 mt of germanium at a price of 6.01 million yuan/mt. 

Vital, through Kunming Rongke, bought 191.2 mt of gallium at a price of 904,500 yuan/mt. 

November 23, 2019

Vital, through Kunming Rongke, bought 19,200 mt of bismuth at a price of 31,520 yuan/mt. 

January 18, 2020

Vital, through Kunming Rongke, bought 3,609 mt of indium at a price of 790,400 yuan/mt. 

Currently, China's indium market still witnesses a significant oversupply, which weighed on the prospects for prices of the metal. Market participants are also concerned about a decline in global demand as Vital, which is both a producer and a consumer, will inevitably need to buy fewer products after the large amount of purchases. 

But according to Vital, it would continue to purchase indium and other minor metals at the same levels as before and on long-term annual contracts. At present, there are no major new applications that consume large amounts of indium. Weak market conditions saw some competitors of Vital halting or scaling back production, and that’s when Vital made the stockpile purchases. 

The recent acquisitions have made Vital dominant in the minor metals market. Vital said the materials will not be sold back into the open market, but will be used to grow its business instead.

"All the metals will be consumed and leveraged internally with our extended value chain, along with the collaboration with our customers, it will benefit the industry and market in many ways," said Vicky Zeng, Global VP for sourcing of Vital. 

The bulk purchases support Vital's long-term strategy and appear to be forward thinking. With all the feedstock available, the company will be able to keep any risk caused by trade and market uncertainties under control.