The tin price has moved higher since an Indonesian government policy change, as measured by the three month tin futures on the London Metal Exchange, trading as high as $23,350 on Sept. 19, up 7.7% this month as Indonesia made changes to tin trading.
Today, the 3 months forward tin price slipped slightly to $23,000 a tonne but market participants remain confused and alternatively delighted with the new rule changes from the Indonesian government.
In essence, the Indonesian government requires tin producers to trade the metal locally before exporting of tin shipments.
The new policy is designed to increase the value of tin shipments and establish a domestically determined benchmark price, according to Trade Minister Gita Wirjawan.
The tin price has certainly increased since the policy change, which would seem to indicate the policy has worked.
PT Timah, Indonesia’s largest tin producer which declared force majeure on exports after the policy change, wants to sell its tin to overseas buyers through the Indonesia Commodity and Derivatives Exchange.
The global tin market faces a deficit of 6,000 tonnes this year, a fourth consecutive annual shortage, Standard Bank said in a report on Sept. 11.
Indonesia’s rule changes were causing confusion and helping to boost prices, it said, forecasting $28,000 a tonne next year.
“We have to be in a position where we can crystallize the value, determine the value,” said Wirjawan. “In three weeks, the price has increased from $20,000 to $23,000. So that really reflects that we are able to crystallize the value.”
LME stockpiles of tin have fallen 11 percent to 13,715 tonnes in September.
TRF Price at posting:
14.0¢ Sentiment: Buy Disclosure: Held
