Tin Exports From Indonesia May Slump as Disrupted Mining Worsens Shortage

* Export will drop 19% this year to 80,000 metric tons

* Exporters only have a little stockpiles

* Macquarie: inventories down 49% this year 

* World facing deficit of tin 17,000 tons compared with a surplus in 2009

Indonesia’s trade ministry forecast that tin shipments from the largest exporter may drop 19 percent this year, exacerbating a global shortage that’s helped drive the biggest rally among base metals in 2010. Futures advanced.

Exports may slump to about 80,000 metric tons in 2010 from 99,287 tons in 2009 as heavy rains disrupt mining, said Alberth Tubogu, export director for mining and industry products at the ministry. That’s similar to an August forecast from Indonesia’s energy ministry for a 20 percent decline in output.

Macquarie Group Ltd. warned earlier this month that global tin supply may lag behind usage “through next year at least,” bolstering prices. Tin futures on the London Metal Exchange have rallied to the highest price since July 2008, driven by the fall in supplies from Indonesia, lower stockpiles and rising demand.

“Some producers may use their inventory to increase sales now that the price is gaining but I doubt it will help much,” Tubogu said by phone. “I spoke with exporters last week and they said they don’t have a lot of tin in stockpiles, especially the small smelters, after heavy rain reduced ore supplies.”

Tin, used as packaging and solder, has advanced about 40 percent in London this year, beating second-placed nickel’s 27 percent jump. The contract, which reached a record $25,500 a ton in May 2008, peaked at $23,800 on Sept. 17 and traded at $23,702 at 4:29 p.m. in Singapore today after gaining 0.4 percent.

‘Unpredictable Weather’

“Unpredictable weather has affected production in Bangka- Belitung,” Tubogu said from Jakarta, referring to the province that accounts for most of the nation’s tin production.

Heavy rains in recent months linked to a La Nina weather event have hurt commodity production in Indonesia, Southeast Asia’s largest economy and the world’s biggest palm oil producer. The event was likely to persist at least until early 2011, Australia’s Bureau of Meteorology said on Sept. 15.

Inventories of tin in LME warehouses stood at 13,655 tons today, down 49 percent this year. The global tin deficit may be 17,000 tons this year compared with a surplus in 2009, according to a Macquarie report from analysts including Jim Lennon earlier this month.

Indonesia’s tin output may plunge about 20 percent this year to about 85,000 tons as wet weather disrupts mining, Witoro Soelarno, secretary to the director-general of minerals, coal and geothermal at the energy ministry, said on Aug. 11.

Tin shipments from Indonesia in the first seven months of this year fell 12 percent from a year earlier to 52,133 tons, the trade ministry said on Aug. 20. Indonesia exported 8,870 tons in July, a 10.5 percent increase from June.

Refined-tin sales from PT Timah, Indonesia’s largest producer, fell 18 percent to 19,760 tons in the first six months of the year from the same period in 2009, the state-owned company said on its website on Aug. 30. Timah shares have rallied 40 percent this year, and last traded at 2,800 rupiah. Source: Bloomberg