Tin shipments from Indonesia surged more than estimated in October as buyers adjusted to a new trade rule that’s designed to help the country displace the London Metal Exchange as the venue for setting benchmark prices. Futures fell to the lowest since Sept. 13.
Exports of ingots and solder rose to 4,070 metric tons from 786 tons in September, Trade Ministry data showed today. That compares with the median estimate of 2,750 tons in a Bloomberg survey, and 11,048 tons shipped in October 2012.
The government wants to challenge the LME as the market that sets the global price of the metal used in smartphones and packaging, ordering exporters from Aug. 30 to trade on a local exchange before shipment. The rule forced PT Timah, the country’s largest producer, to declare force majeure and pushed futures to a six-month high. While it’s still early, the new policy probably meets expectations and will be kept, according to Deputy Trade Minister Bayu Krisnamurthi.
“Exports still need to be managed” from getting too high, said Wilim Hadiwijaya, an analyst at PT Ciptadana Securities. Shipments will keep rising as more companies join the Indonesia Commodity and Derivatives Exchange, he said, estimating sales of 5,000 to 6,000 tons this month and next.
Trading on the ICDX, the only bourse that’s allowed to trade the metal before shipment, more than doubled to 3,020 tons in October from September, exchange data show. Members that can trade the metal rose to 28 from 12 on Aug. 30, ICDX said Oct. 30. That includes 16 producers and 12 buyers, it said.
“Yes, we are consistent,” Krisnamurthi told reporters in Jakarta today, when asked if the policy will be kept. “If tin is mined legally, we will facilitate it. If there are problems in exchange membership, we will help. All in all, over a year, the drop in shipments won’t be as much as everyone feared.”
Tin beat the five other main metals on the LME this year amid forecasts for a global deficit, and after the Indonesian rule change. Futures, which touched $24,000 a ton on Oct. 4, fell 0.7 percent to $22,664 at 2:39 p.m. in London after earlier today falling to $22,426 a ton.
The local-trade rule may help prices average $25,000 next year, according to Stephen Briggs, an analyst at BNP Paribas SA in London ranked by Bloomberg as the top forecaster over the past eight quarters. The average so far this year is $22,207.
The exports in October, based on surveyors reports’ before shipment, comprised of 3,314 tons of ingots and 756 tons of solder, ministry data showed today. That compares with 400 tons of ingots and 386 tons of solder in September.
Sales in the first 10 months of the year fell 11 percent to 72,858 tons compared with same period in 2012, according to Bloomberg calculations. Shipments this quarter may drop 64 percent to 10,000 tons from a year ago, the median of estimates from seven analysts and producers compiled by Bloomberg showed.
Timah -- based in Pangkalpinang, Bangka Belitung, the country’s main producing area -- reported a drop in third-quarter net income after declaring force majeure. Shares (TINS) rose 1.9 percent to 1,590 rupiah in Jakarta.
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