Expectations of a tighter tin market over the next couple of months due to export rule changes in Indonesia and falling stocks have created a premium for metal for nearby delivery. The backwardation between cash tin and the three-month benchmark jumped to near $44 a tonne in official trading on Monday. That compares with a $1 discount on July 1 and a $36 discount on June 16.
The premium for the August contract over the September contract was also higher at $40 a tonne. "It's stemming from the August/September period, the market is short that period. There is covering because of perceived future tightness," a metals trader said. Stocks of tin in LME approved warehouses at 7,575 tonnes are down nearly 40 percent since the middle of December last year. To halt illegal exports, Indonesian producers from August 1 will need to prove their tin comes from government-certified mines before it can be shipped.