By Melissa Pistilli—Exclusive to Tin Investing News

Tin Prices Fell 25% in Third Quarter

Although commodities are still up 0.96% for the year, the sector has had it’s worst three-month period since 1970 when the Standard & Poor’s GSCI Commodity Index was started, finishing the third quarter down 29%. 

Brokerage firms have lowered their price forecasts for several commodities, leading many to fear the bull market has run its course. Peter Kordell, director of research at Jigsaw Commodities, said the possibility that “the bull market could end, and in a very dramatic way” is quickly being realized. “After such a big collapse, it takes a long time for the same confidence to come back.”

The increasingly dire credit situation has made many financial institutions leery of extending funding, leading to heavy liquidation in the commodities market. According to energy economist Philip Verleger, commodities investment as of September 23rd has fallen from $237 billion at the start of the third quarter to $152.6 billion.

The base metals are down for the year, with tin and nickel suffering the most. Each has lost more than 25% in the last quarter. After Congress voted down the $700 billion bailout plan (now being called a “rescue” plan in an Orwellian attempt to change reality), tin prices hit their weakest level since September 18, dropping 6.3% to $16,680 on the London Metal Exchange.

However, there is still hope amongst the investment community that the commodity ship has not sunk. According to Goldman Sachs “the commodity cycle is far from over” because the supply constraints responsible for the rise in prices over the last years are still a reality. In fact, the current price drops should be seen as “compelling buying opportunities.”

Congo Tin Trade Update: Proof of Continuing World Supply Constraints

The Democratic Republic of Congo government has declared that starting in January 2009 it will allow the provinces of North Kivu, South Kivu, and Maniema to export only refined tin ore. The three eastern provinces export primarily raw cassiterrite ore through mineral traders in North Kivu’s capital Goma. Last year, the government enacted a similar restriction on copper and cobalt in the province of Katanga.

John Kanyoni, president of the Association of Exporters of Minerals in North Kivu, has said the government’s January deadline is unreasonable because the region lacks the needed mineral processing equipment. “You can do this kind of thing in Katanga,” he said, “where the Belgians left behind lots of infrastructure. But we only found out there was tin here a few years ago. There’s nothing here.”

The region may have to wait up to four months for delivery of new concentrators and then installation will most likely take another three to four months. To make the situation even worse, the eastern provinces have been the stage of war and insurgent fighting that has destroyed much of the infrastructure in the region.

The big question is: how to acquire reliable energy to power the concentrators? Most of the power stations in the eastern provinces are ageing and hardly able to meet the regions electricity demands, making power outages a common occurrence.

Earlier this year, the region’s mineral traders initiated a two-month export strike and successfully stopped Ofida, the national customs agency, from tripling the reference price used to levy taxes on tin exports.

If the January deadline is not extended, exporters may once again cease operations. “We don’t think we will just let people play with us like that. We’ll stop. There’s no other alternative,” said Kanyoni.

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