Bloomberg News

Indonesian Tin Producers Extend Export Halt to Boost Prices

November 01, 2011

(Updates price in fifth paragraph.)

Oct. 31 (Bloomberg) -- Fifteen tin producers in Indonesia, the world’s largest shipper, agreed to extend a self-imposed ban on exports until the end of the year to help boost prices. They will seek to widen support for the halt at a meeting this week.

The companies took the decision at a meeting in Pangkalpinang, Bangka Belitung province on Oct. 28, said Johan Murod, director at PT Bangka Belitung Timah Sejahtera, a group of six smelters. The producers are seeking to hold a bigger gathering involving all miners on Nov. 2, said Rudy Irawan, deputy chairman of the Indonesian Tin Industry Association.

Indonesian companies suspended exports from Oct. 1 after the metal lost 17 percent in September on concern Europe’s debt crisis may derail the global economy. Producers have said that shipments won’t resume until prices rebound to $25,000 per metric ton, from $22,100 on Oct. 28. The country represents more than 40 percent of global exports, according to Peter Kettle, research manager at St. Albans, England-based ITRI Ltd.

“This may provide a long-term floor for prices,” said Eugen Weinberg, head of commodities research at Commerzbank AG. “It is likely to tighten the global tin market further in the medium term. We think most of the miners are going to implement the ban due to the tight state control,” he said by e-mail.

Three-month delivery tin dropped as much as 0.5 percent to $22,000 per ton on the London Metal Exchange, and traded at $22,045 at 11:52 a.m. in Singapore. The metal, used as solder in electronics, has declined 18 percent this year and last traded above $25,000 in August.

Industry Meeting

The producers will ask other companies including PT Timah, the country’s largest producer and the biggest exporting company, and PT Koba Tin, a unit of Malaysia Smelting Corp., to agree to extend the ban at a meeting tentatively scheduled for Nov. 2 in Bangka, said Irawan. Bangka Belitung is the main producing area.

“Last Friday’s meeting was just a preliminary to a bigger one,” Irawan said from Pangkalpinang yesterday. “We will seek support from all stakeholders in the tin industry and I’m confident that all companies will follow our decision to extend the ban. This is an effort to get the best price possible.”

Two calls and a text message to Timah Corporate Secretary Abrun Abubakar at the weekend seeking comment weren’t answered. The country has 32 registered tin exporters, according to data from the Trade Ministry.

Declining Stockpiles

A longer ban may reduce inventories monitored by the LME to about 10,000 tons by the year-end, Kettle said by e-mail yesterday. Tin stockpiles monitored by the LME fell 22 percent between Sept. 30 and Oct. 28, when they stood at 16,550 tons. They touched 16,525 tons on Oct. 25, the lowest level since January, according to Bloomberg data.

The meeting with all producers and Bangka Belitung Governor Eko Maulana Ali will discuss plans to fix export quotas and set up a local market as an alternative to the LME, Irawan said.

“The Jakarta or Babel Tin Market is the most important plan in the mid-term,” he said. “We are the biggest tin supplier. It’s time for us to have an independent price and no longer depend on the LME. We see at least by next year the global tin trade will use our price as a benchmark.”

Indonesia is entering the wet season which normally reduces mining, said Irawan, who is also the president director of Jakarta-based smelter PT Mitra Stania Prima.

Rainy Season

“We are entering the rainy season where production usually is low, so a ban for another two months won’t be a big problem for smelters,” Irawan said. “We just need to cover routine costs such as salary, which is not that big.”

The wet season started in some parts of Indonesia this month and most regions will see normal precipitation in November, according to the Meteorology, Geophysics and Climatology Agency.

Indonesia exported 73,223 tons of refined tin in the first nine months of the year, a 9.3 percent increase from a year ago, the trade ministry said on Oct. 10. The country shipped 92,487 tons last year and 99,287 tons in 2009, ministry data show.

The tin companies will seek a further meeting with officials from the trade ministry to discuss the measures to defend prices and gain the government’s support for imposing the plan, Murod said Oct. 29.

“We expect the trade ministry can play its role as the regulator on foreign trade and support this,” Murod said. “This is just an industry move by smelters in Bangka, but we need a central government regulation because we cannot reach producers in other locations like Riau Islands or Kalimantan.”

--Editors: Jake Lloyd-Smith, James Poole

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


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