Tin Cargoes From Indonesia Climb as Buyers Adapt to RulesYoga Rusmana and Eko Listiyorini
Tin shipments from Indonesia probably rebounded last month from September as buyers began to adjust to new rules that have curbed sales from the biggest exporter, while remaining on course for a drop this quarter. Prices fell.
Exports of refined metal and products increased to 2,750 metric tons in October from 786 tons in September, the median of estimates from four analysts and four producers compiled by Bloomberg showed. The forecast compares with exports of 11,048 tons in October 2012. Shipments in September were the lowest monthly total since 2007, when the government began tracking sales of the metal used as solder and packaging.
Indonesia ordered exporters from Aug. 30 to trade the metal on a local exchange before shipment, seeking greater control over supplies and prices in a challenge to the London Metal Exchange. The rule pushed futures to a six-month high in October and forced PT Timah, the country’s largest producer, to declare force majeure. Exports may drop 64 percent to 10,000 tons this quarter compared with the same period in 2012, the median of estimates from three analysts and four producers showed.
“Exports must be prevented from rising too much,” Agung Nugroho, corporate secretary at Timah, said by phone from Jakarta on Nov. 4. “We want to boost sales. But if we do that and supplies are increasing rapidly, the regulation won’t work. We don’t need big volume.”
Futures, which rallied to $24,000 a ton on Oct. 4, fell 0.2 percent to $22,952 at 2:58 p.m. in Singapore. Tin outperformed the five other main base metals on the LME this year amid forecasts for a global deficit and the Indonesian shift. The trading rule may help to boost prices to 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.
Shippers from Indonesia are carefully maintaining quality in accordance with the new rules to build customers’ trust, Nugroho said. Indonesia, which may release the October trade figures next week, set the minimum purity for exports at 99.9 percent and maximum lead content of 300 parts per million.
Trading on the Indonesia Commodity and Derivatives Exchange, 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 tin rose to 28 from 12 on Aug. 30, the Jakarta-based ICDX said Oct. 30. That comprises 16 producers and 12 buyers, it said.
Stockpiles tracked by the LME dropped to 12,120 tons yesterday, 21.5 percent below a 22-month high Aug. 30, when the rule took effect. Indonesia, which used to account for about 40 percent of global trade, exported 98,817 tons last year.
Global demand will rise 2.3 percent to 350,000 tons next year, exceeding supply by 2,000 tons after an estimated 4,000-ton shortage in 2013, according to BNP. Unless Indonesian exports rebound there will probably be a period of “severe market tightness,” Briggs wrote in an Oct. 15 report.
PT 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 declined as much as 2.5 percent to 1,550 rupiah, the lowest level since Oct. 25, and traded at 1,560 rupiah.