Tin shipments from Indonesia, the world’s largest exporter, will probably decline to the lowest level in seven years as the new trading rule forces producers to hold back cargoes, according to PT Timah.
Exports are set to slump 19 percent to 80,000 metric tons this year from 98,817 tons in 2012, said Agung Nugroho, corporate secretary at the world’s third-biggest tin producing company. That’s lower than every year going back to 2007 when the Trade Ministry started monitoring sales.
Indonesia, which represents about 40 percent of global shipments, introduced the new regulation from Aug. 30 as part of wider efforts to increase the value of commodity exports and strengthen control over supply. The government requires tin for export to be first traded on a domestic exchange.
“It will be interesting to see the export figure in September,” which should be very small, Nugroho said in phone interview from Jakarta today. “Even if we can sell, there’s no guarantee we can get buyers. Volume is very small.” Shipments may average 3,000 tons a month through December, he said.
Timah, based in Pangkalpinang, trades physical tin contracts on the Indonesia Commodity and Derivatives Exchange with four other producers and seven buyers. The bourse traded a total of 225 tons since Aug. 30, including 20 tons sold at $22,695 today, it said in a statement.
Tin futures jumped to a five-month high of $23,126.5 yesterday on supply concerns. The metal fell 1 percent to $22,699 on the London Metal Exchange at 11:02 a.m. local time today. Indonesia exported 68,002 tons of tin in the first eight months, an 11 percent increase from year earlier, according to data compiled by Bloomberg.
Producers may increase shipments of other tin products such as solder and anode, said Nugroho. The domestic trading requirement will only apply for these products from Jan. 1, 2015, according to the regulation.
Smelters in Bangka Belitung, the main tin producing islands, probably hold 7,000 tons of ingots in stockpiles, said Nugroho. Tjahyono Mukmin, director of smelter CV Serumpun Sebalai, confirmed the figure today.
“This is an opportunity for us,” said Nugroho. “There’s a chance to buy the metals if the source is clear.” Some smelters have asked Timah (TINS) to cooperate to sell tin, he said.
Most smelters were still holding back exports as they’re waiting for the Jakarta Futures Exchange to get permits to trade contracts, Mukmin said in an interview in Pangkalpinang. Sutriono Edi, head of the Commodity Futures Trading Regulatory Agency, couldn’t comment when reached on his mobile phone as he was in a meeting.
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