China's Tin-Import Demand Is Declining, Timah Says

By Naila Firdausi

Aug. 21 (Bloomberg) -- China's demand for tin imports is falling, according to Wachid Usman, president director of PT Timah, the world's second-largest producer of the metal.

``We see slowing demand from China,'' Usman said today in an interview in Pangkalpinang, Indonesia, where the company is based. China accounted for about 11 percent of Timah's sales in 2007.

China's industrial output grew at the slowest pace since February 2007 in July on weaker export orders, according to statistics bureau figures released Aug. 14. Manufacturing in China contracted in June for the first time since a survey began in 2005, the China Federation of Logistics and Purchasing has said.

Usman is attending a two-day conference in Pangkalpinang from today to address sustainable tin-mining development in Indonesia's Bangka Belitung province, home to the bulk of the country's reserves of the metal used in cans and for soldering.

Three-month tin futures on the London Metal Exchange, which touched a record $25,500 a ton in May, gained 3.8 percent to $20,500 a ton yesterday. That's the highest close since Aug. 1.

``It's hard to say how much the price should be,'' Usman said today, declining to give a forecast. Global prices may average $23,000 a metric ton next year, Usman said on June 24.

China is the world's largest tin producer. Still, refined tin exports from the country have dwindled this year as a 10 percent export duty and the appreciating yuan make overseas sales uneconomical. Refined exports plunged 98 percent to 386 tons in the first half, according to customs data.

Eko Maulana Ali, the governor of Bangka Belitung province, said in an interview yesterday that his administration would not recommend the issue of any more tin-export permits. Indonesia, the world's largest tin shipper, has required exporters to hold licenses since February 2007 to better regulate industry.

Timah's stock has dropped 17 percent this year compared with the 24 percent decline on the Jakarta Composite Index. The shares gained as much as 4.4 percent today to 2,375 rupiah, and traded at that level at 9:32 a.m. in Jakarta.

To contact the reporter on this story: Naila Firdausi in Pangkalpinang at nfirdausi@bloomberg.net