The world’s largest tin producer, PT Timah, announced that it would delay some exports in March after the outbreak of the coronavirus (COVID-19). The spread of COVID-19 has already disrupted global trade and saw prices fall over 10% month-on-month (MoM) in March. The company also stated that it would cut monthly output by 20 – 30% while it gauged global demand.
Now, following the release of the final sales through the JFX for March, it can be seen that volumes fell by 38% MoM to 4,605 tonnes. While other private tin smelters also trade over the exchange, PT Timah produces the majority of the material.
Our view: JFX sales in March were some 1,500 tonnes below the average over the last six months, a significant decline. However, if the data is seasonally corrected, this is not unexpected. March exports are usually around 1,000 tonnes below the average month.
Without any cuts to production and exports, we would expect Indonesian exports to peak in May. This would coincide with the likely peak in COVID-19 infections, and near the lowest point in demand, pushing the market into surplus.
However, if PT Timah continue to cut mining and refined tin production, we would expect refined tin production to balance the likely decline in demand.