Tin Smelters in Indonesia Put Staff on Furlough as Exports Slump
Tin smelters in Indonesia, the largest exporter, started to furlough staff in the biggest producing region as some companies have yet to meet a new rule requiring metal be traded on a local exchange before shipment.
“It’s hard for us, some smelters have stopped operations and put workers on furlough,” said Tjahyono Mukmin, president director of Serumpun Tin, a group of 18 producers that wants to sell their output through the Jakarta Futures Exchange, or JFX. Mukmin, speaking in a telephone interview, didn’t give an estimate of the number of workers affected.
Indonesia accounts for about 40 percent of global shipments of the metal used in packaging, and Serumpun Tin’s comments show the domestic consequences of the new policy, which has curbed exports and pushed prices in London to a six-month high. While the Indonesia Commodity and Derivatives Exchange in Jakarta has started local tin trading before export, the JFX’s request for a license was rejected the regulator. M. Bihar Sakti Wibowo, a director at the JFX, said today that the exchange will reapply.
“If this continues, it will definitely have a big impact,” Mukmin said, referring to Bangka Belitung, the biggest tin-producing region. “People have no income because smelters stopped operations, it could slow the economy.”
Tin for delivery in three months outperformed the five other main base metals including copper on the LME this year as the Indonesian curbs risked worsening a global deficit. The metal rallied to $24,000 a metric ton on Oct. 4, the highest since March 15, and traded at $23,585 at 3:07 p.m. in Jakarta.
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