Indonesia delays some tin exports due to rain

* Expected lower output squeezes supply to meet contracts
* Prolonged rains cut onshore production
* 70-85 pct output goes to long-term contracts

The world's top tin exporter, Indonesia, will delay some exports after heavy rains hit mining, adding to upward pressure on tin prices riding high due to supply concerns.
Indonesia's state-controlled tin producer PT Timah Tbk (TINS) will delay shipments to some buyers because of an expected fall in output, its president director said on Wednesday.

Heavy rains and floods have hit Indonesia, and La Nina weather is expected to prolong the rainy season for months, worsening a trend of falling tin supply.

Worries about declining supplies from Indonesia propelled benchmark tin CMSN3 on the London Metal Exchange (LME) to a record high of $27,338.50 a tonne in mid-October.
The rains have hampered Timah's mining and squeezed the supply of tin ore, leading to lower production of refined tin.

The firm will try to fill its 2010 tin output target of 50,000 tonnes but expects tin production to fall slightly next year, President Director Wachid Usman said.
"We will not be able to fulfil some contracts but we renegotiated with the customers and they have agreed," Usman said, of the delay that will affect customers from Asia Pacific countries including Japan, China and Korea.

Timah, the world's largest integrated tin miner, produced 29,631 tonnes of refined tin in the first nine months of 2010, a fall of 12 percent from 33,765 tonnes in the same 2009 period.

The firm sold 29,252 tonnes of refined tin in the period from January to September, down 20 percent from 36,453 tonnes a year earlier.

TIGHT SUPPLY PROSPECT

Timah's move to delay shipments means that tight supply may continue until next year, analysts said.

"It is a little surprising as earlier this year many had expected Timah to raise output. This does point to an even tighter market going into 2011," said David Wilson, an analyst at Societe Generale in London.

"It is difficult to see where else consumers can go to secure metal."

Tin CMSN3 on the London Metal Exchange stood at $25,899 a tonne, gaining 52.80 percent so far this year on supply worries.

Tin prices are expected to average at $24,750 a tonne next year, a 33 percent rise on forecasts from Reuters' July poll. The metal is seen averaging at $19,537.50 a tonne this year, analysts said, up 11 percent from the previous forecasts. 

Timah gave no details of delayed cargoes or how long the delays would last.

"Long-term contract customers understand our production situation," said Timah's spokesman Abrun Abubakar.

About 70 percent to 85 percent of Timah's tin production in 2010 has been distributed to long-term buyers and the rest to the spot market, Abrun said, adding that the firm expects the same distribution pattern next year.

Analysts had expected Indonesia's refined tin output to fall nearly 6 percent this year because of the extended rains.Source: Reuters