World’s Biggest Tin Exporter Cuts Output After Price Rout

The largest tin producer in Indonesia, the world’s top exporter, is cutting output by as much as 50 percent after prices slumped to the lowest in almost six years.

PT Timah will produce 1,500 metric tons to 2,000 tons of refined tin a month starting in April, below this year’s target of 2,000 tons to 3,000 tons, Corporate Secretary Agung Nugroho said on Wednesday. The company has 6,000 tons of refined tin stockpiles, equivalent to about three months of sales, he said.

Tin’s the worst performing industrial metal on the London Metal Exchange this year after sliding 20 percent amid rising supplies from Myanmar and China. Indonesian suppliers of the metal used in everything from cans to smartphones are seeking to stem the decline by restricting output while the government tightens export and trading rules to limit shipments.

“We have cut our tin ore output and that limits our ability to produce refined tin,” Nugroho said in a phone interview from Jakarta. “If prices stay low, inevitably we have to keep reducing production,” he said, adding that Timah is operating 6 to 7 furnaces out of the 12 it owns, he said.

Futures on the London Metal Exchange slumped 11 percent in the four days through Monday to $14,550 a ton, the lowest closing price since October 2009. They rallied 7.3 percent in the following two days to trade at $15,605 on Wednesday.

Prices Slide

LME prices now are below Timah’s operating costs of more than $16,000 a ton, Nugroho said. Tin should rebound to $18,000 to $20,000 in the second half of the year as more producers cut back, he said. State-owned Timah is based in Pangkalpinang, Bangka Belitung, the country’s main mining area for the metal.

PT Refined Bangka Tin, the country’s biggest private tin smelter, may cut production by at least 10 percent in April from a “normal level” of about 700 tons per month, Chief Executive Officer Petrus Tjandra said by phone on Wednesday.

“We stopped processing ore into refined ingot two days ago because there’s no stock left,” Tjandra said. The company will rely on slags to make ingot, probably for the next one or two months to keep the furnace running, he said.

PT Stanindo Inti Perkasa has one week of ore inventories and will probably start processing slags next week, Director M.B. Gunawan said. “Our slags are limited, maybe only enough to produce 15 tons of tin, not much but at least we can sell that and use the money to pay the salary and to survive until prices recover,” he said.

Global Surplus

The government will only allow exports of refined tin ingot and solder under the new regulations, said Sujatmiko, the director of mineral and coal supervision at the Energy and Mineral Resources Ministry, who only uses one name. It will make it harder for exporters to obtain a shipping license with a recommendation required from the energy ministry and no longer from the regional governor, he said.

The global tin market is shifting into surplus amid rising ore supplies from Myanmar, according to SMM Information & Technology Co. in Shanghai. The country will increase exports to China by 17 percent this year to 35,000 tons of tin in concentrate, according to estimates from ITRI Ltd., a St, Albans, England-based, producer-funded industry group.

China’s refined tin output reached 39,300 tons during the first three months of the year, according to data from National Bureau of Statistics. That’s the highest first-quarter total in data going back to 1997. Imports during the same period slumped 26 percent to 1,358 tons, the lowest in seven years.

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