The Indonesia Commodity & Derivatives Exchange (ICDX) is currently planning a tin futures contract, which it hopes to introduce within the next 3 to 6 months, according to its head of business development, Stella Lukman, who spoke with ITRI earlier this week at the ICDX Indonesia Tin Conference & Exhibition in Jakarta.
Tin futures trading has been under internal development by the ICDX for some time and is supported by the government. The bourse is now ready to meet sellers and potential buyers in the market for feedback. Stella Lukman mentioned how further work will be necessary to establish how the tin futures trading can be integrated with the bourse’s established mechanisms for physical tin trading and that the ICDX also needs to ensure that arbitrage between the ICDX and the LME is possible. A network of ICDX warehouses will be needed and the ICDX is in contact with LME warehouses for technical assistance with this. The success of the proposed futures contract will require high liquidity and will therefore be introduced solely for the TINPB300 tin specification, the tin product most actively traded through the ICDX at present.
Futures trading on the ICDX will allow tin producers in Indonesia the opportunity to hedge. This could help stabilise the country’s tin industry, which has had to adapt to a volatile tin price and successive structural changes brought about by government regulation over recent years.