Tin exports from Indonesia, which surged in June before new purity rules in the world’s largest shipper came into force, will probably contract in July by the most in eight months, according to a survey.
Shipments may fall 28 percent to 8,000 metric tons compared with June, the median of estimates from six exporters and an analyst in a Bloomberg survey showed. That’s the steepest drop since November, when sales fell 28.1 percent, and compares with 8,298.5 tons a year earlier, data compiled by Bloomberg show.
While the rules on exports that came into effect from July 1 were not as severe as initially planned, shippers boosted sales in June to the highest level since December 2011. Tin is the worst base-metal performer after nickel in London this year, with prices losing 5.9 percent last month as Indonesian sales climbed. The metal is used in packaging and electronics.
“June was the peak,” said Agung Nugroho, corporate secretary at PT Timah, the world’s third-largest producer, referring to shipments. “The new rule is putting a break on exports. Prices are also a factor, the margins are very tight.”
Tin for delivery in three months rose 0.3 percent to $19,830 a ton on the London Metal Exchange at 6:22 p.m. in Singapore. The metal has lost 15 percent this year, trailing nickel, which has dropped 20 percent. Shares in PT Timah lost as much as 3.5 percent to 1,120 rupiah in Jakarta.
Stockpiles of tin tracked by the LME have expanded 8 percent to 13,845 tons in 2013 even as Standard Bank Group Ltd. estimates there will be 6,000 ton deficit this year, the fourth consecutive global shortage, according to a July 16 report. Exports from Indonesia may drop to about 5,000 tons in July and August before normalizing from September, Standard Bank said.
Under the new rules, Indonesia increased the purity of shipments to 99.9 percent tin from 99.85 percent, while removing limits on other metals including cadmium and allowing three times as much lead as had been expected. The planned framework was eased three days before the effective date on July 1.
First-half shipments totaled 55,011 tons, including the 11,111.4 tons exported in June, and the six-month figure was 16 percent higher than a year earlier, according data compiled by Bloomberg. The Trade Ministry may announce the trade data for July in the week of Aug. 12.
“People had expected that exports will be very small in July, but now that the rule has been relaxed, shipments will probably return to their normal level,” said Wilim Hadiwijaya, an analyst at PT Ciptadana Sekuritas. The amended regulation will help sales at some smelters, he said by phone from Jakarta.
Shipments will extend the decline in August and September as miners stop work for the Eid al-Fitr holiday, said M.B. Gunawan, president director at smelter PT Stanindo Inti Perkasa. Sales may also drop as a new trading rule starts, he said, referring to a regulation that requires ingots to be traded in a local market from Aug. 30 before export. For other tin products, the rule is effective from Jan. 1, 2015.