The Indonesian-based Jakarta Futures Exchange (JFX) has launched a new physical tin contract, which has been backed by the country’s major producer, PT Timah.
The JFX initially aimed to bring a physical tin contract to the market in 2013, but this was delayed, with the contract officially launching on 21 August. Initial trading was marked by an export of 1,410 tonnes of tin from Pangkalpinang, located on the island of Bangka. This material is understood to have been Timah brand, with the company shifting its exports from the ICDX to the new JFX contract. When the JFX initially planned to launch the contract, it was backed by the majority of private smelters, with Timah instead backing the ICDX.
Our View: While the option of a different trading contract is interesting, this does not help private smelters, who remain unable to export due to regulations set by the central government, rather than by one of the country’s exchanges. The switch of exchange may have caused the decline in refined tin exports from Indonesia last month, with sources close to Timah citing export license renewals as the cause of the issue. With a new license seemingly acquired, it is likely that material – stockpiled in the interim – will be released to the market.