Timah: Tin Sales Volume May Rise 6%
Reva Sasistiya & Bloomberg
PT Timah, the world’s second-largest tin producer, may sell more tin this year than previously estimated if prices and demand continue to recover, officials from the state-owned company said on Wednesday.
Krishna Syarif, the company’s finance director, said if tin prices remained above $15,000 a ton and the demand in Asia Pacific and Europe recovered, Timah would produce more and could achieve 50,000 tons in sales, a 6 percent gain from last year and an increase from its initial target of around 46,000 tons this year.
Abrun Abubakar, Timah’s corporate secretary, said the company would enter the spot market to boost sales to 50,000 tons. “If prices rise to $18,000-$20,000 a ton, we would enter the spot market.”
Tin futures in London, which traded on Wednesday at $15,325 a metric ton, have gained 43 percent this year on speculation the global economy is recovering, reviving metals demand. Former Federal Reserve Chairman Paul Volcker said on June 11 that the global economic slump was easing “most clearly” in the United States and the United Kingdom.
“Prices of commodities are recovering, which can help demand” for tin, Krishna said. From the second quarter onward, “sales can be at least 4,000 tons a month,” after a total of about 11,000 tons in the first three months.” Timah sold 46,438 tons of tin in 2008.
The average tin price may range from $14,000 to $15,000 a ton in the second half, Krishna said. Tin futures on the London Metal Exchange averaged $10,938 a ton in the first three months.
Pangkalpinang-based Timah may increase sales through spot buyers if prices climb, Krishna said. About 42,000 tons of the 47,000 sold last year were contractual sales, while the rest was through the spot market, corporate secretary Abrun said.
In an effort to boost Timah’s sales volume, the company is planning to expand its business in North America, Abrun added.
“We have strong competitors from Bolivia and Peru in the North American market and that is why we will only sell premium tin product there,” he said, adding that out of 46,438 tons of Timah’s output last year, only 1 percent went to the North America. Timah has cut its 2009 capital expenditure by half to Rp 350 billion ($34 million) from Rp 700 billion.