Bloomberg News

Twenty-Five Indonesian Tin Producers to Extend Export Ban

November 15, 2011

(Adds Usman comment in second paragraph.)

Nov. 3 (Bloomberg) -- Twenty-five tin smelters in Indonesia, the largest shipper, agreed to extend an export ban until the yearend to boost prices, said Ismiyardi, head of the provincial parliament in Bangka Belitung, the top producing area.

PT Timah, the world’s biggest exporting company, and PT Koba Tin said they support the extension. Timah is allowed to ship contractual sales, said Bangka Governor Eko Maulana Ali. The company will halt spot sales and fulfill contractual shipments, said Timah’s president director Wachid Usman today. The tally of smelters prolonging the ban rose from 15 on Oct. 28.

Tin plunged 17 percent in September on concern that Europe’s debt crisis may derail the global economy, prompting Indonesian smelters to suspend exports from Oct. 1 to try to drive prices to $25,000 per metric ton. The country represents more than 40 percent of global exports, according to Peter Kettle, research manager at St. Albans, England-based ITRI Ltd.

The smelters want export quotas to start from January, said Rudy Irawan, who was appointed executive chairman of a new group called the Indonesia Tin Association at the meeting yesterday.

“We will give a recommendation to the governor and the trade ministry for quotas for each company,” he said in an interview. “We don’t need to sell a lot of tin if we can sell less but at a higher price.”

Lower Stockpiles

While three-month tin gained 8.1 percent last month as the ban took effect, the contract underperformed the 10 percent advance in the LMEX Index of six base metals. Tin, which last exceeded $25,000 per ton in August, traded at $21,850 today.

A longer ban may cut inventories monitored by the London Metal Exchange to about 10,000 tons by the yearend, said Kettle on Oct. 29. Stockpiles of the metal used to make solder have slumped 26 percent since Sept. 30 to 15,895 tons, the lowest level since December, according to Bloomberg data.

“This seems to be a stronger result than from the meeting at the weekend,” said Kettle yesterday. “This will help bring down LME stocks and stabilize prices, but I don’t see any big upside potential for prices in the short-term.”

The companies that agreed to the extension yesterday are trading and producing tin this year and compare with 32 registered exporters, according to Johan Murod, director at PT Bangka Belitung Timah Sejahtera, a smelter group.

The country is seeking to set up a local tin market in the first quarter, said Irawan.

Contractual Sales

The export quotas “may be just temporary,” he said. “If we see that the Babel Tin Market is effective in controlling prices and free of speculation, we can stop quotas. It will be a producers’ market based on real supply-demand fundamentals.”

The smelters will meet the trade minister next week to discuss the ban and the local market, said Ali, the provincial governor. While Timah is permitted to ship contractual sales, the company needs to maintain a halt on spot sales, said Ali.

“I’ve spoken with Timah President Director Wachid Usman and he agreed to this term,” Ali told the meeting. “We have to honor contracts to buyers, but we asked them to commit to this agreement and support the moratorium by halting spot sales.”

Koba Tin backs the extension and will discuss contractual sales with the Bangka governor and the government, said Khairul M. Yusuf, the finance director.

Indonesia exported 73,223 tons of refined tin in the first nine months of the year, 9.3 percent more than 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.

Tin also dropped this year as a manufacturing slowdown in China and the U.S. threatened to cut demand. Timah’s Usman said Sept. 27 that the decline had been mostly driven by poorer market sentiment caused by the European crisis.

As Indonesia is entering the wet season, which can reduce mining, an extended ban “won’t be a big problem for smelters,” Irawan said last month. He is also the president director of Jakarta-based smelter PT Mitra Stania Prima.

--With assistance from Eko Listiyorini in Jakarta. Editor: 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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