Tin Declines to Three-Week Low in London as Stockpiles Expand

By Claudia Carpenter

Nov. 19 (Bloomberg) -- Tin fell to a three-week low in London as expanding stockpiles signaled production is outpacing demand. Copper, nickel and aluminum also dropped.

Tin stockpiles in warehouses monitored by the London Metal Exchange have jumped 27 percent since Nov. 10. The global supply deficit will narrow next year as production climbs the most in four years and demand stabilizes, according to Barclays Capital.

``Electronics demand, as well as cars, is down,'' said Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt.

Tin for delivery in three months declined $700, or 5.4 percent, to $12,350 a metric ton as of 10:40 p.m. on the London Metal Exchange. Prices have dropped 25 percent this year. The contract earlier reached $12,000, the lowest since Oct. 27.

Production will jump 3.4 percent next year while demand gains 0.2 percent, Barclays said. Supply will fall short of demand by 10,000 tons after a deficit of 17,000 tons this year.

Tin demand outpaced supply by 3,500 tons in the first nine months of the year, the World Bureau of Metal Statistics said in a report today. Consumption dropped 3.4 percent to 254,700 tons.

Aluminum for delivery in three months fell $32, or 1.7 percent, to $1,885 a ton and copper declined $134, or 3.6 percent, to $3,616 a ton. Aluminum stockpiles tracked by the London Metal Exchange climbed 5.1 percent, the biggest gain since Sept. 17, close to a 14-year high of 1.7 million tons.

Lead Declines

``Last time that LME three-month aluminum prices sustained levels below $1,800 per ton was in the May-July 2005 period,'' Texas-based researcher Harbor Intelligence said in a report. ``Back then oil, alumina spot, U.S. dollar, aluminum inventories, and global premiums were pretty much around today's levels. There are fundamental conditions for today's prices to extend their losses and fall toward $1,800-1,700 per ton.''

Lead dropped $30, or 2.3 percent, to $1,270 a ton, zinc fell $41, or 3.3 percent, to $1,188 a ton and nickel fell $300, or 2.8 percent, to $10,450 a ton.

Aluminum, copper and nickel supply outpaced demand in the first nine months of the year, while lead and zinc recorded deficits, the World Bureau of Metal Statistics said.

Metal supplies will be ``tighter then ever'' as a deepening financial crisis constrains development of new mines and pushes prices lower, Alan Heap, a commodity analyst at Citigroup Inc., said at the Australia Mining Congress in Sydney today.

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