Tin poised for record on supply shortfall
By Javier Blas in London
Published: September 15 2010 18:50 | Last updated: September 15 2010 22:16
Tin prices rose to a two-year high, less than 10 per cent below the metal’s all-time high set in mid-2008, as production problems in Indonesia, the world’s top exporter, continued to tighten the market.
The metal, used for soldering in the electronics industry, could hit a record high before the end of the year or early in 2011, analysts and traders said.
EDITOR’S CHOICE
Metal prices on a high as Beijing goes green - Sep-14.Australia set for bumper wheat crop - Sep-14.India’s cotton industry pleads for export ban - Sep-13.Russia’s wheat farmers fear for next year’s crop - Sep-06.Buyers look to corn as supplies become tighter - Sep-10.Wheat trading jumps on Russia crisis - Sep-07..If the forecast proves accurate, tin would become the first base metal to revisit the all-time highs set in mid-2008.
Analysts are also betting that copper prices could set an all-time high in 2011.
On the London Metal Exchange, tin for delivery in three months rose to an intraday high of $23,200 a tonne, 3.2 per cent up on the day, and only 9 per cent below the record of $25,500 a tonne of May 2008.
Tin prices have surged because of a drop in supplies from Indonesia. The country’s exports of refined tin, which account for a third of the global market, dropped 14.5 per cent to 43,263 tonnes in the first half of the year compared with the same period of 2009.
The drop comes on the back of a crackdown on illegal mining in Bangka-Belitug, off Sumatra island, and the depletion of the easily mined reserves.
Small and medium-sized smelters, which depend on supplies from rudimentary family-owned mines in the island, have reduced output or shut down because of the lack of tin ore supplies and credit strains, analysts said.
Meanwhile, analysts said demand was relatively robust due to restocking.
The relatively small tin market registered a shortfall of 9,900 tonnes between January and July, against a surplus of 9,500 tonnes in the same period of last year, according to the World Bureau of Metal Statistics, a UK-based consultancy.
Tin inventories at LME’s warehouses have fallen 50 per cent since the beginning of the year and are now at the lowest level since May 2009.
Singapore, the US and Japan are the world’s largest importers of refined copper to feed their large electronic industries.
Elsewhere in commodities on Wednesday, oil prices fell, under pressure from volatile currency markets.
The price drop came in spite of the US government reporting a larger-than-expected fall in US crude oil inventories. Nymex October West Texas Intermediate fell 78 cents to $76.02 a barrel while ICE October Brent dropped 25 cents to $78.91 a barrel.
The US Department of Energy said the country’s crude stocks dropped last week by 2.5m barrels, against expectations of a 2.2m-barrel drop.
Crude inventories remain, however, extremely high at 357.37m barrels.
Petrol stocks fell by nearly 700,000 barrels, somewhat more than expected, while middle distillates, including diesel and heating oil, dropped by 340,000 barrels, in line with Wall Street’s forecasts.
Oil has traded between $70 and $80 for most of the past year, supported by production cuts by the Opec oil cartel and rising demand in developing countries. But high inventory levels in developed countries amid low consumption growth have put a cap on prices.
The Opec oil cartel will meet in October in Vienna to review its official production levels. Senior officials at the group have signalled that they are likely to leave their output unchanged.
www.ft.com/cms/s/0/376e4728-c0ee-11df-99c4-00144feab49a.html