Tin Makers From Indonesia to Choke Off Exports Till 2012 to Revive Prices

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 back the extension, said Ismiyardi after an industry meeting. Timah is allowed to ship contractual sales, said Bangka Governor Eko Maulana Ali. Two calls to the mobile phone of Wachid Usman, the company’s president director, weren’t answered. Fifteen smelters had agreed to maintain the ban 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.

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

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, advanced 1 percent to $22,000 in London, reversing a drop of 0.7 percent.

Lower Stockpiles

A longer ban may cut inventories monitored by the LME to about 10,000 tons by the year-end, 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.

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

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

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.”

Contractual Sales

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 a 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.

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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