China establishes indium exchange to combat markdowns

China has established the world's first indium exchange in the city of Liuzhou, in south China's Guangxi Province, with the aim of uniting domestic indium makers to prevent large markdowns in prices, a Guangxi Nonferrous Metals Industrial Association official told Interfax today.

The exchange provides a consolidated indium spot-trading platform for both domestic and overseas indium makers, with services including stockpiles,

transportation, clearances and loans.

Major indium makers in Guangxi Province have been some of the first companies to join the exchange, including Liuzhou China Tin Co. Ltd., Guangxi Yintai Technology Co. Ltd., Guangxi Tanghan Zinc and Indium Co. Ltd. and Liuzhou Yingger Metals Co. Ltd.

"The exchange was established in order to keep indium price markdowns within a reasonable range," a senior GNMIA official, surnamed Tang, said. "Japanese indium plate manufacturers united last year to purchase indium from China, which decreased domestic indium prices and caused China's indium makers to suffer reduced profits."

"Trading on the exchange began on May 11 and the current indium spot-price is RMB 5 million ($651,559.18) per tonne, which is still a low figure," Tang said. "Profit-taking overseas manufacturers usually sell indium plates back to China at the much higher price of 5 times the cost of the Chinese raw materials."

China mainly exports indium concentrate to Japan, the United States and to European countries, who manufacture indium plates. The few Chinese companies that specialize in indium manufacturing produce mostly low-end products, according to Tang. Approximately 70% of China's indium concentrate is exported to Japan.

"In order to prevent a further drop in indium prices and to protect indium makers, the Guangxi government is planning to purchase RMB 500 million ($65.16 million) of indium concentrate from indium makers and to ask them to reduce production in accordance with the market," Tang added.

When reached by Interfax, a China Tin official, surnamed Gan, expressed his doubts as to the effectiveness of the exchange.

"As one of the leading indium makers in China, we have of course become a member of the exchange. However, the exchange might be a two-edged sword – it can both help to prevent an indium price markdown and also encourage market speculation due to listed stockpiles," Gan said.

According to Gan, indium concentrate prices have fluctuated wildly in the last few years, exceeding RMB 10 million ($1.30 million) per tonne last year, while remaining at less than RMB 1 million ($130,311.84) per tonne from 2002 and 2003.

China Tin produces 30 to 40 tonnes of indium concentrate per annum, Gan said.

China is the world's largest indium producer and exporter, producing 160 tonnes of indium concentrate last year. China's major indium makers are located in Guangxi Province.

The exchange plans to expand to include other large indium makers nationwide such as Zhuzhou Smelter Co. Ltd. and Huludao Zinc Co. Ltd. in an attempt to standardize indium prices.

Global reserves of indium only amount to approximately 16,000 tonnes, two-thirds of which is located in China, mainly in Guangxi Province.

Indium is used in LCD product manufacturing and in the electricity, photoelectric, national defense and communications industries.



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