Tin Advances on Supply Threats

Tin has already advanced approximately 40 percent this year, and is the top gainer of the base metals on the LME with second-place nickel trailing by nearly 13 percent. Tin reached a record breaking price of $25,500 per tonne in May 2008, peaked at $23,800 on Sept. 17 and is currently trading at around $23,700 per tonne. The metal received an extra boost this week with the announcement of supply threats to the metal’s largest exporter.

Macquarie Group Ltd. warned earlier this month that global tin supply may lag behind usage “through next year at least,” bolstering prices. Output in Indonesia is being threatened by intense rainfall; and this week, Indonesia’s trade ministry forecast that tin shipments from nation may drop 19 percent this year. Exports may slump to about 80,000 metric tonnes in 2010 from 99,287 tonnes in 2009

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

Further supply tightening may result from the current mining suspension in the Democratic Republic of Congo. The country’s president announced this week that mining operations would be suspended in the three eastern provinces due to illegal activities. The indefinite suspension affects North Kivu, South Kivu, and Maniema provinces, minister of mines Martin Kabwelulu said. “The scale of mineral exploitation in this part of the country is a result of the activities of mafia groups,” the statement said. These groups “are reinforcing, in spite of stabilization efforts, recurrent insecurity.” The three provinces are rich in cassiterite, or tin ore, as well as gold, tantalum and tungsten. The suspension is immediate and applies to all companies and individuals involved in the mining industry.