The melt-down in LME tin prices on Friday produced an instant reaction from the main Indonesian producers, who will halt sales at prices below US$17,000/tonne.
“PT Timah and all our members will not trade below US$17,000,” Jabin Sufianto, president of the Indonesian Association of Tin Exporters (AETI), told Reuters after the LME price briefly fell to a low of some $13,600/t before recovering sharply, helped by Chinese arbitrage buying. At current prices, at least 40 per cent of AETI’s 20 members are not producing and the others are at half-capacity or less, he said by phone after an association meeting. AETI members have an annual capacity of about 46,000 tonnes, and the 40 per cent that had halted output had a capacity of about 12,000 tonnes a year, Mr Sufianto said. Timah’s corporate secretary Agung Nugroho confirmed that the state-owned company had stopped selling at below US$17,000 per tonne. Agung also told Bloomberg that Timah would cut production below 2,000 tpm, while the CEO of the country’s largest private smelter, PT Refined Bangka Tin said it would stop production from this week.
ITRI View: Timah and AETI private producer members had previously agreed to limit sales to 2,500 tpm and 2,000 tpm respectively from the start of this month, but so far the agreement has had no impact on Indonesian supply. Provisionally reported exports rose by nearly 20% year-on-year in Q1 this year and sales on the ICDX in the eleven market days up to last Thursday amounted to over 3,000 tonnes. This week 115 tonnes of tin (200ppm lead) were sold yesterday at $17,450/t, which we assume was an intra-company trade. We need to see zero or near zero activity on ICDX for a week or two now – plus perhaps announcements of production cuts elsewhere in the world – to restore confidence in a market which has become overwhelmingly bearish.
