Bloomberg News

Indonesia Tin Association to Ask Timah to Stop Shipments

December 06, 2011

(Adds Timah shares in sixth paragraph.)

Nov. 24 (Bloomberg) -- The Indonesia Tin Association will ask PT Timah, the world’s largest exporting company, to stop all shipments to support global prices, said Johan Murod, general secretary of the producer group.

Twenty-six companies agreed to keep a spot export ban until the yearend at a meeting yesterday, Murod said in an interview. Timah and PT Koba Tin were not present, he said. Timah will review the association’s request, and discuss it internally and with customers, said Corporate Secretary Abrun Abubakar in a text message today.

“We’ll ask Timah to stop all shipments because if they’re still exporting, even if it’s only to their contracted buyers, the ban won’t be effective in increasing the price,” said Murod.

Almost 30 smelters from Indonesia, which represents about 40 percent of global exports, agreed this month to extend their halt on spot shipments to push the global price to $25,000 a metric ton. The ban started Oct. 1. Timah was allowed to meet contractual orders while halting spot sales, Eko Maulana Ali, provincial governor of Bangka Belitung, said Nov. 2.

Tin for three-month delivery climbed as much as 2 percent to $20,602 a ton on the London Metal Exchange today before trading at $20,500 at 5:55 p.m. in Singapore. The price slumped 24 percent this year on concern that the worsening European debt crisis would hurt the global economy and curb demand.

Buyers’ Meeting

Timah’s shares dropped as much as 1.7 percent to 1,700 rupiah, the lowest in more than month, before ending at 1,720 rupiah in Jakarta. The stock dropped 37 percent this year, versus the little changed benchmark Jakarta Composite Index.

“The private smelters have reaffirmed their solidarity after signs that there had been a split appearing,” Peter Kettle, research manager at St. Albans, England-based ITRI Ltd., said in an e-mail.

Consumers complained about a shortage at a weekend gathering between the association and at least 10 buyers from Germany, Japan, South Korea and Taiwan, according to Murod. Stockpiles in warehouses monitored by the LME dropped more than 40 percent in the past three months to the lowest in a year.

The association is scheduled to meet buyers today in Singapore to discuss contracts and prices for shipments in 2012, said Ismiyardi, head of the provincial parliament. The participants include companies from the U.S., Japan, Thailand, South Korea, the U.K., Philippines and Taiwan, he said.

Shipment Decline

Koba Tin plans to ship 400 tons this month, he told reporters, citing port authority data. A call to the cell phone of Koba Finance Director Khairul M. Yusuf went to voicemail.

Tin shipments may drop to 4,000 tons each in November and December, the lowest monthly level in three years, according to the median estimate in a Bloomberg News survey of eight traders, analysts and producers.

That compares with 5,442 tons in October and an average of 8,136 tons in the first nine months, before the ban took effect. The trade ministry may issue the data for November in the second week of December.

Shipments of 4,000 tons would be the smallest quantity since exports of 3,805.5 tons in December 2008, according to data from the trade ministry tracked by Bloomberg. In November last year, exports were 8,986 tons.

With Timah and Koba making contract shipments and some sales from other smelters, exports may be 4,000 tons to 5,000 tons a month in November and December, said Kettle.

Timah is the same position as other Bangka producers in that the company will not sell at a low price, said Abubakar.

“We want more than $23,000 a ton, the minimum price for contract commitments,” he said. “For spot sales we want $25,000 a ton. We support the export halt.”

--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


Best LBO Ever
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus