Tin shipments from smelters in Indonesia, the world's top exporter of the metal, are expected to tighten in coming weeks due to a change in export rules that is likely to underpin prices. Indonesian tin smelters have ramped up shipments this month, but exports are set to tail off sharply as local smelters have faced delays in receiving export approvals ahead of new rules that come into effect from August 1.
"Many of the smelters don't have the new licence yet. There have been delays in the new regulation from the government," Jabin Sufianto, president of the Indonesian Association of Tin Exporters (AETI) told Reuters. "If you can't export the tin ingot, your cash flow will be affected. So I believe the production will be lower, and as an impact, the price will increase. But I don't think it's going to be a huge problem because the government will help us getting our licences."
Indonesia is tightening its rules for tin exports, in a fresh bid to crack down on environmental degradation and smuggling, and to enforce payment of royalties and taxes on shipments. Under new rules that were announced in May, refined tin producers must hold 'clean and clear" certification, to show that the tin ore they use originates from government-certified mines.
Indonesia has been concerned about the scale of illegal tin mining and smuggling and the environmental damage it can cause. Signs of supply stress have started to emerge in the tin market, with the London Metal Exchange cash contract reaching the highest in a year against the LME benchmark this month. LME tin prices are up nearly 10 percent so far in June. Traders said the drop in exports was likely to crimp supply out to August or September, but was unlikely to put a rocket under prices given still sluggish demand from the electronics sector and ample supply from neighbour Myanmar.
"I presume there will be a little bit of tightness in the next 1-2 months. With the new regulations coming in, very few of the smelters are certified to ship out," said a physical merchant in Singapore. "A lot of them are shipping a lot of tin out to Singapore before July 31. But tightness for a month or so out of Indonesia won't make much of difference, because the steady flow of ore out of Myanmar.
China's imports from Myanmar doubled last year, and continued to climb to June. So far imports are running at 78 percent higher than last year. Refined tin shipments from Indonesia rose 33 percent in June as traders stepped up shipments ahead of the export ban.