As the old adage goes, “The only cure for high prices, is high prices.” The fundamentals of the tin market are showing this statement to be true. The high price in April prompted a sell-off of stocks in China. Now that the price is depressed Indonesia has ban exports hoping for a higher price.
Supply of tin for 2011 may have a 15,000 tonne deficit, driving prices higher still. China recently capped production of tin and other base metals; and Indonesia, the largest exporter of tin, has capped production at 100,000 tonnes and cracked down on illegal mining.
Reduced tin production from Indonesia has had a big effect on prices for the base metal. Fearing that the high prices will encourage a wave of new production, Indonesia has stated that it will limit production to 100,000 tonnes, which could cause a larger supply deficit in 2011, boosting prices even higher.
A police crackdown on illegal tin mining in Indonesia, including in Bangka-Belitung islands, has cut ore supplies. Analysts maintain the current crack down may not be as severe as the one in 2006, which halted tin production at small smelters for months, mainly because the government has tightened tin export rules. Moreover, PT Timah Tbk and PT Koba Tin, a unit of Malaysian Smelting Corp, were not affected by the crackdown.
Indonesia’s ability to stop supply as and when prices weaken should see tin remain above $10,000/t, 30%-40% above historical levels. For more information, click here
Malaysian tin jumped 9.5 percent on Tuesday, boosted by surging LME prices and a squeeze in supplies. For full story, click here
The company expects to produce below 50,000 tonnes of refined tin next year due to falling prices and a government plan to set an output quota for tin. For full story, click here
Malaysian tin jumped 9.5 percent on Tuesday, boosted by surging LME prices and a squeeze in supplies. For full story, click here
Tin prices are expected to trade higher as supply-side issues from Indonesia are expected to support prices of the commodity. For more information, click here
Wednesday, October 12, 2011