Tin Surges as Indonesia Plans Shipment Halt to Counter Rout
September 27, 2011, 6:11 AM EDTBy Yoga Rusmana
(Adds comment from PT Timah in fourth, final paragraphs.)
Sept. 27 (Bloomberg) -- Indonesia, the biggest exporter of tin, plans to halt overseas shipments from Oct. 1 to support prices after a slump, said Johan Murod, director at PT Bangka Belitung Timah Sejahtera, a group of smelters. Futures rallied.
PT Timah, the biggest producer, and Malaysia Smelting Corp. unit PT Koba Tin are among 28 companies that agreed to the halt after meeting yesterday with Bangka Belitung Governor Eko Maulana Ali, Murod said by phone. Overseas shipments will resume if the price goes to $25,000 per metric ton, Murod said.
Reduced supplies from Indonesia may help to stem a plunge in prices that’s been driven by concerns that the world economy may slip into another recession as U.S. growth falters and Europe battles a sovereign-debt crisis. Tin producers faced bankruptcy if prices continued the slump, Murod said on Sept. 24.
“The drop in prices to below $20,000 was mostly driven by market sentiment over the European crisis, not because of demand-and-supply fundamentals,” PT Timah President Director Wachid Usman said by phone today. Timah will be ready to resume overseas shipments “when the price is right,” said Usman, who attended the producers’ meeting in Pangkalpinang last night.
Tin for delivery in three months climbed as much as 6 percent to $21,550 per ton on the London Metal Exchange, extending yesterday’s 0.6 percent gain. The metal sank to $17,000 on Sept. 23, 49 percent below the all-time high of $33,600 touched on April 11.
‘Very Effective’
“This should be a very effective measure,” Wu Xiaofeng, an analyst at data provider SMM Information & Technology Co., said by phone from Shanghai. “The country is the world’s major supplier, accounting for one-third of total production.”
Commodities including base metals have plummeted this month as investor concerns about a global recession have intensified. Tin lost 13 percent in the week to Sept. 23 as nickel and copper shed 15 percent and lead dropped 17 percent.
“We feel that the export ban is the best instrument at the moment that may effectively help boost prices,” Murod said yesterday after the meeting in Pangkalpinang, Bangka Belitung. “This is an effort to help the tin industry, as well as the traditional miners.” Bangka Belitung is the main mining region.
Timah Sejahtera, which groups six smelters, suspended production last week after the plunge in prices prompted mining suppliers to halt sales of unprocessed ore, Murod said Sept. 23.
The Bangka Belitung governor will issue a decree as a legal basis for the export halt, Rudy Irawan, deputy chairman of the Indonesian Tin Industry Association, said in a text message.
Solder represents 52 percent of global tin demand and tinplate 17 percent, according to ITRI Ltd., a St. Albans, England-based researcher. The metal is used in electronic goods and a high proportion of electrical appliances, ITRI said.
Shares of PT Timah advanced as much as 8.8 percent to 1,850 rupiah in Jakarta today. “We agreed and fully supported the export halt,” said Usman. PT Timah will discuss the suspension with its buyers, he said.
--With assistance from Helen Sun in Shanghai. Editors: Jake Lloyd-Smith, Richard Dobson
To contact the reporter on this story: Yoga Rusmana in Jakarta at yrusmana@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
