Tin Beating All Metals on Fourth Year of Shortages
Indonesia, the biggest tin supplier, is poised to ship the least metal in a decade, extending shortages into a fourth year at a time when surpluses are emerging for most other industrial metals.
Sales will drop 24 percent to 75,000 metric tons because most smelters won’t meet a higher purity standard that starts in July and ore reserves are diminishing, according to the median of 13 exporter and analyst estimates compiled by Bloomberg. Prices will rise 18 percent to $28,750 a ton on the London Metal Exchange this year, the median of 14 forecasts shows.
Tin climbed 22 percent in 2012, more than any other LME metal, after supply contracted the most since at least 2005. Morgan Stanley raised its estimate for this year’s shortage fourfold since October and RK Capital Management LLP, which manages $3 billion of assets, says tin is its top pick among base metals. Indonesia is raising purity standards so it can sell directly to electronics companies rather than refiners outside the country. “Most of the smelters are not ready to comply with the new limit,” ...
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Supply from mines in Indonesia, accounting for 40 percent of global trade, declined 10 percent to 94,000 tons last year, BNP Paribas SA estimates. Workers are digging 12 meters (39 feet) down to find ore, compared with about 3 meters five years ago, Arsani said. Demand will outpace supply by 5,000 tons this year, equal to 38 percent of LME-tracked stockpiles, based on the median of 10 analyst estimates.
... CHINA:
“You really have the Chinese market oversupplied,” said Nicholas Snowdon, an analyst at Barclays Plc in New York. “You only have to look at the weakness in the Chinese prices versus LME to see that fundamental conditions in China aren’t supporting an improvement in prices there.” Chinese stockpiles may diminish after the nation ended seven consecutive quarters of slowing growth in the final three months of 2012. Its economy will keep accelerating until at least the third quarter, according to the median of estimates from as many as 32 economists compiled by Bloomberg.
WORLD: About 70,000 tons of extra mine supply is needed from 2012 to 2016 to meet annual demand growth of 2 percent and compensate for lower Indonesian output, according to Greenfields Research Ltd. in Australia and ITRI. That may require investment of about $2.5 billion, they estimate.
