Tin Rises Most in 4 Months in London on Indonesia; Copper Jumps

By Claudia Carpenter

Aug. 14 (Bloomberg) -- Tin advanced the most in almost four months in London as reduced Indonesian exports exacerbate a world supply shortfall. Copper and aluminum also gained.

Indonesia's PT Timah, the world's second-biggest tin miner, may cut sales to 55,000 to 56,000 metric tons this year, Bisnis Indonesia reported, citing President Director Wachid Usman. The company in May forecast sales of 58,000 tons. The government of tin-producing province Bangka Belitung meets next week to discuss environmental damage from tin mining.

``It's possible with the meeting occurring, there may be stricter-than-normal steps being taken to contain illegal mining,'' said Peter Kettle, research manager for tin industry trade group ITRI Ltd. in St. Albans, England. ``The fundamentals supporting tin prices still is that Indonesia's production is falling.''

Tin for delivery in three months gained as much as 5.9 percent to $18,850 a ton on the London Metal Exchange, the steepest advance compared with intraday prices since April 23. The contract traded up $850, or 4.8 percent, at $18,650 as of 1:34 p.m. in London. Prices have fallen 16 percent this month.

``The fact that this international conference is coming up, plus the big drop in prices over the last week or so, it wouldn't be surprising to see some sort of story along the lines Indonesia is doing something to hold back supply,'' Kettle said.

China, the largest tin supplier, produced 8,400 tons in July, down 34 percent from the prior month, according to the National Bureau of Statistics.

Copper Advances

Global supply will probably fall short of demand by 16,000 tons this year compared with a deficit of 2,000 tons last year, said Dan Smith, a metals analyst at Standard Chartered Plc in London. Tin will average $21,216 a ton this year, the bank forecasts. So far, it's averaged $20,493 a ton.

Copper rose $120 to $7,550 a ton and aluminum gained $5 to $2,815 a ton. Jiangxi Copper Co., China's second-biggest smelter of the metal, will cut production of copper rods and wires by 30 percent from this month after the local government restricted power supply. Jiangxi joins aluminum and zinc smelters in China that are curbing output because of electricity shortages.

``The Jiangxi provincial government asked us to reduce power consumption,'' said Wang Chiwei, executive director and vice president.

Copper is probably being supported by ``short-covering,'' or purchases of the metal previously sold by traders who were betting on lower prices, Smith said. Power cuts are negative because they signal reduced demand, he said.

Lead gained $60.50 to $1,740.50 a ton and zinc was unchanged at $1,650 a ton. Nickel fell $398 to $19,102.

To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net