Thirty Indonesian tin smelters have stopped ingot shipments this month because of a delay in regulatory approval to start physical trading on a local exchange in the world’s largest exporter of the metal.
The smelters with a total production capacity of about 10,000 tonnes per month have committed to trade Serumpun Tin contracts at the Jakarta Futures Exchange and have yet to receive trading permits, Hidayat Arsani, president of the Indonesian Tin Mining Association, said today. The independent smelters accounted for about 70 percent of the country’s shipments last year, according to trade ministry data.
The stoppage follows Indonesian rules requiring ingots for export to be traded locally from Aug. 30 and higher purity standards. Five producers out of a total of 47 in the country, including the biggest PT Timah (TINS), have started trading physical tin contracts on the rival Indonesia Commodity and Derivatives Exchange.
“This is really bad, when some smelters have invested money to meet the purity standard, now they still cannot export,” Arsani said by phone from Bangka island, the country’s main producing area. The smelters will wait up to 45 days for the permits and if they are rejected will take the case to court, Arsani said.
Tin for delivery in three months fell 0.4 percent to $21,150 a ton on the London Metal Exchange by 6:02 p.m. Jakarta time. The metal, used in soldering and packaging, has risen 5.9 percent since July 1, when the higher Indonesian purity standards came into effect and led to a slump in exports.
The Jakarta Futures Exchange submitted a permit application to the Commodity Futures Trading Regulatory Agency on Aug. 20, Director M. Bihar Sakti Wibowo told reporters in Jakarta. The smelters will meet tomorrow in Bangka, the country’s main tin producing area, to discuss the matter, said Tjahyono Mukmin, the president director of the Serumpun Tin board. Eighteen smelters have registered as members to trade tin, out of the 30 had earlier agreed to do so, said Mukmin.
“We are studying their application,” Sutiono Edi, head of the Commodity Futures Trading Regulatory Agency, told reporters in Jakarta today. “We need to evaluate the current contracts first before we can continue with another. We want to have one price reference, we don’t want to confuse the market by having two markets.”
Indonesian smelters are backing local exchanges to try to establish an alternative to the benchmark on the London Metal Exchange.
“If we really have to, we can stop exports while waiting for the permit for as long as 3 months,” Mukmin said.
To contact the reporter on this story: Yoga Rusmana in Jakarta at email@example.com
To contact the editor responsible for this story: James Poole at firstname.lastname@example.org