Refined-tin output from Indonesia, the world’s largest exporter, may decline this year as the European debt crisis hurts demand, according to the head of an industry group. Tin fell, the sole loser among base metals.
“If prices stay at the current level, production will most likely decline,” Hidayat Arsani, president of the Indonesian Tin Mining Association, said in an interview yesterday in Pangkalpinang, capital of Bangka Belitung, the country’s biggest producing region. Output was about 90,000 metric tons last year.
Tin has lost 24 percent from a six-month high in February as Europe’s crisis and slower growth in China reduced sales of the metal used in soldering and packaging. Prices below $20,000 a ton have some adverse impact on small-scale production in Indonesia, which is entering the peak season for output and exports, according to ITRI Ltd. Research Manager Peter Kettle.
“The big question at the moment is whether lower tin prices will result in a fall in small-scale mine production,” Kettle said by e-mail. “Most of them should still be covering cash costs at current prices.”
Three-month tin fell as much as 0.8 percent to $19,550 a ton on the London Metal Exchange, and traded at $19,625 at 4:44 p.m. in Jakarta as the five other metals including copper gained. While tin remains 2.2 percent higher this year, the metal fell in the four months to May in the worst run since the 2008 global crisis. The price peaked this year at $25,880 a ton on Feb. 8.
Indonesia represents about 40 percent of global exports, according to St. Albans, England-based ITRI, an industry group. Bangka Belitung accounts for about 90 percent of output and shipments. Exports in the first five months fell 4 percent to 37,668 tons, according to data from the Trade Ministry.
While slower Chinese demand had helped push the global market into a “clear surplus” at present, a shortage may reemerge in the second half as growth reaccelerates, according to Barclays Plc. Tin may gain to $30,000 by the year-end, with a full-year deficit of 5,000 tons, according to a May 14 report.
Producers in Bangka Belitung agreed to suspend spot shipments in the final quarter of last year to try boost prices to $25,000. The voluntary curb, which didn’t cover contractual sales, was dropped Dec. 31. Prices fell in the quarter.
Europe’s crisis has escalated this month, with Spain becoming the fourth euro member to seek an international bailout. Greeks will vote on June 17 in elections that may determine whether that country stays in the euro zone.
The European turmoil may result in a market slump rivaling the 2008 global crisis, according to Singapore state-owned investment company Temasek Holdings Pte. The Standard & Poor’s GSCI Spot Index of raw materials has lost 10 percent this year, touching the lowest level since November 2010 on June 4.
The Indonesian Tin Mining Association, also known by its Indonesian initials of ATTI, replaced the Indonesian Tin Association, which was dissolved as it didn’t get support from the Bangka Belitung administration. Arsani, previously president of the old group, was installed yesterday as the head of ATTI by Bangka Belitung Governor Eko Maulana Ali.