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Indonesian Output Troubles Puts Tin on Track for Record
Bambang Djanuarto | October 06, 2010

Tin ingots are stacked for shipping in the warehouse of the Timah tin plant in Pangkal Pinang, Bangka Island, Indonesia, in this file photo. The metal traded on Wednesday at $26,790 a ton on the London Metal Exchange, an all-time high. (Bloomberg Photo/Dimas Ardian) Tin ingots are stacked for shipping in the warehouse of the Timah tin plant in Pangkal Pinang, Bangka Island, Indonesia, in this file photo. The metal traded on Wednesday at $26,790 a ton on the London Metal Exchange, an all-time high. (Bloomberg Photo/Dimas Ardian)
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Jakarta. Tin may rally to a record $28,000 a metric ton as the bad weather that has disrupted output this year in Indonesia may extend into 2011, according to a government official.

The advance will help to boost revenue for producers and also increase royalty payments to the government, said Witoro Soelarno, secretary to the director general of minerals, coal and geothermal at the Energy Ministry.

The metal traded on Wednesday at $26,790 a ton on the London Metal Exchange, an all-time high.

Tin is the best performer on the LME this year, climbing about 56 percent on concerns that supply disruptions in Indonesia, the world’s largest exporter, and China will cut stockpiles as demand gains.

Venture Minerals, building a mine in Tasmania, has said that global shortages may last five years and forecast a major supply gap.

“Tin prices will continue to climb as the bad weather that disrupted production will persist until next year,” Soelarno told reporters in Jakarta Wednesday.

Soelarno said on Aug. 11 that Indonesia’s output of the metal may drop 20 percent this year to 85,000 tons because of heavy rains.

Tin is the first base metal to reach a record since the financial crisis in 2008, outperforming copper, nickel and zinc.

The metal, used as a solder and in packaging, touched a low of $9,700 a ton in December of that year as demand dropped and investors pared commodity holdings.

The three-month contract rose Wednesday for a fourth straight session, gaining as much as 3.3 percent.

A La Nina weather event has brought heavier-than-usual rainfall to parts of Australia and Asia this year, including Indonesia, Southeast Asia’s largest economy.

The rains have also been blamed by industry groups in the country for lower output or missed forecasts for cocoa, palm oil and coal.

Tin stockpiles tracked by the LME have dropped 53 percent this year, falling to a 17-month low of 12,495 tons this past Friday.

Exports from Indonesia declined for the first eight months of this year to 60,107 tons from 67,798 tons a year earlier, the Trade Ministry said on Sept. 22.

Tin output from China may be restricted until the end of the year because of limitations on power use, industry group ITRI said on Sept. 29.

A general ban on mining was also imposed last month in three eastern provinces in the Democratic Republic of Congo, Africa’s largest producer.

Venture Minerals said there was a dearth of new tin projects. Managing director Hamish Halliday said: “The catch-up that’s required on the exploration side is quite vast.”

Shares in Timah, Indonesia’s biggest producer, surged as much as 5.7 percent before closing 3.2 percent higher.
 

Bloomberg