By Yoga Rusmana - Jun 13, 2012 9:02 AM GMT+0700
Refined-tin output from Indonesia, the world’s largest exporter, may drop this year as the European debt crisis slows economic growth and hurts demand, according to the head of an industry group.
“If prices stay at the current level, production will most likely decline,” Hidayat Arsani, president of the Indonesian Tin Mining Association, said in an interview yesterday in Pangkalpinang, capital of Bangka Belitung, the country’s biggest producing region. Output was about 90,000 metric tons last year.
June 13 (Bloomberg) -- Pranay Gupta, chief investment officer for Asia at Lombard Odier, talks about the outlook for global financial markets and economies. Gupta also discusses Felda Global Ventures Holdings Bhd.'s initial public offering. He speaks in Hong Kong with Zeb Eckert on Bloomberg Television's "First Up." (Source: Bloomberg)
Tin has lost 24 percent from a six-month high in February as Europe’s crisis and slower growth in China reduced sales of the metal used in soldering and packaging. Prices below $20,000 a ton have some adverse impact on small-scale production in Indonesia, which is entering the peak season for output and exports, according to ITRI Ltd. Research Manager Peter Kettle.
“The big question at the moment is whether lower tin prices will result in a fall in small-scale mine production,” Kettle said by e-mail. “Most of them should still be covering cash costs at current prices.”
Three-months tin ended at $19,700 a ton on the London Metal Exchange yesterday. While that’s 2.6 percent higher this year, the metal declined in the four months through to May in the worst run since the global recession in 2008. The price peaked this year at $25,880 a ton on Feb. 8.
Indonesia represents about 40 percent of global exports, according to St. Albans, England-based ITRI, an industry group. Bangka Belitung accounts for about 90 percent of output and shipments. Exports in the first five months fell 4 percent to 37,668 tons, according to data from the Trade Ministry.
‘Clear Surplus’
While slower Chinese demand had helped push the global market into a “clear surplus” at present, a shortage may reemerge in the second half as growth reaccelerates, according to Barclays Plc. Tin may gain to $30,000 by the year-end, with a full-year deficit of 5,000 tons, according to a May 14 report.
Producers in Bangka Belitung agreed to suspend spot shipments in the final quarter of last year to try boost prices to $25,000. The voluntary curb, which didn’t cover contractual sales, was dropped Dec. 31. Prices fell in the quarter.
The Indonesian Tin Mining Association, also known by its Indonesian initials of ATTI, replaced the Indonesian Tin Association, which was dissolved as it didn’t get support from the Bangka Belitung administration. Arsani, previously president of the old group, was installed yesterday as the head of ATTI by Bangka Belitung Governor Eko Maulana Ali.
To contact the reporter on this story: Yoga Rusmana in Jakarta at yrusmana@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
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