Shipments of refined tin from Indonesia fell 32 percent in August on the month, a trade ministry official said on Friday, as current low prices for the metal hold down supplies from the world's top exporter. Indonesia's August tin exports fell to 5,645.87 tonnes from 8,298.47 tonnes in July, as low prices forced tin producers to close operations and hold back on spot market sales. Shipments in July had dropped 14 percent on the month.
"Exports were down because the international market price for tin was still not conducive for exports," said Johan Murod, chief executive of Babel Tin Group. August exports were also down 34 percent from the same period last year. Benchmark London tin prices slumped from record highs above $33,000 a tonne last year to $17,400 a tonne in mid-August, with demand and the outlook hit by the global economic slowdown and the euro zone debt crisis.
Since then LME tin prices have recovered slightly, to stand at $20,024 a tonne on Friday. However, any rapid upward trend in tin prices was likely to be short-lived, analysts said. "News coming out of Indonesia was pretty positive, which is why tin outperformed the other base metals," said Barclays metals analyst Gayle Berry, adding that tin prices had gained around 10-12 percent over the past three weeks.
Berry attributed the rise to factors such as smelters' plans to cut production, an announcement by biggest tin miner PT Timah Tbk that it would halt spot sales, a massive increase in LME cancelled warrants and increasing imports into China. But that could change soon. "What's taken a shine off that is you've got Timah saying 'Ah, yes, now that prices have improved we're going to resume spot sales again'," Berry said.
Tin prices would need to climb above $23,000 a tonne to begin to push exports, Murod said, adding that at least five of the smelters in the main tin-producing region of Bangka-Belitung remained shut. But production would most probably resume before prices reached that level, said one metals analyst who declined to be identified. "The market's come to view the periodic threats by the industry as hollow. The discipline on the producers' side tends to waver as soon as prices move in the direction the industry wants. This results in any rallies being snuffed out as soon as producers start sneaking material back into the market." Indonesia's tin smelters have a history of disrupting supplies in efforts to boost prices, although analysts have been sceptical of such moves, given economic and investor sentiment.
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