Already a Bloomberg.com user?
Sign in with the same account.
Tin smelters in Indonesia’s largest producing region have restarted output after prices rallied, boosting supplies from the world’s biggest exporter, according to an industry group. Futures fell, leading base-metal losses.
About 70 percent of smelting capacity in Bangka-Belitung province is being used, Hidayat Arsani, president of the Indonesian Tin Mining Association, said in a telephone interview today. Last month, the group estimated that about 30 percent of capacity was functioning, with 24 of 28 smelters closed.
Tin rallied to a four-month high yesterday after shipments from Indonesia, which accounts for about 40 percent of global trade, plunged in August and orders to remove the metal from warehouses jumped. Higher prices may boost profits at companies including PT Timah (TINS), the third-biggest producer. The metal is used as solder in electronic products as well as for packaging.
“Production has been resumed but is not yet at full capacity,” Arsani said from Pangkalpinang, Bangka-Belitung. “Supplies of ore are also still limited as miners are not yet fully producing.”
Three-month tin rose to $21,200 a metric ton on the London Metal Exchange yesterday, the costliest since May 9. The metal had tumbled into a bear market in May as demand waned on slowing global growth, prompting the Indonesian shutdowns as smelters said costs were not covered. The price fell as much as 2.4 percent to $20,300, and was at $20,350 at 3:22 p.m. in Singapore.
Smelters are waiting for prices to stabilize before producing at full capacity, said Sukito Gunawan, a director at PT DS Jaya Abadi. Producers regard $23,000 a ton as a so-called ideal price, Gunawan said.
Exports from Indonesia declined 32 percent to 5,645.9 tons last month compared with July, reaching the lowest level since January. PT Timah said on Aug. 29 that it was resuming spot sales after tin rallied 13 percent in the week to Aug. 24.
Orders to remove tin from LME warehouses, known as canceled warrants, accounted for 68 percent of total stockpiles on Sept. 11, the biggest share on record. Yesterday, canceled warrants totaled 7,095 tons, or 61 percent of the 11,665 tons being stored. Holdings dropped for a fourth month in August.
Companies based in Bangka-Belitung produced about 80,000 tons last year from a national total of 105,000 tons, according to data from the government and ITRI, a St. Albans, England- based researcher. Indonesia exported 96,020 tons last year.
To contact the reporters on this story: Yoga Rusmana in Jakarta at email@example.com; Eko Listiyorini in Jakarta at firstname.lastname@example.org
To contact the editor responsible for this story: Jake Lloyd-Smith at email@example.com