Tin Prices Spike on Indonesian Supply Bottleneck

Michael Teague |

Tin contracts slated for delivery in three months’ time rose over 5 percent to $24,000 per metric ton on the London Metal Exchange on Friday, continuing a climb that began with the implementation of an August 30 rule in Indonesia, the world’s largest producer of the metal.

It has been just over a month since the Indonesian government passed a law that requires all refined tin to be traded on a local exchange before it can be eligible for export. Indonesia accounts for about 40 percent of the global tin supply, and there is currently only one exchange in the country to handle contracts.

Friday’s activity sent the metal to a six-month high on the LME, as Barclays PLC (BCS) estimated that demand for tin will exceed supply by some 3,000 metric tons come 2014, and analysts are seeing no price-relief in the near future.

William Adams with London’s Fastmarkets.com stated in an interview that “fundamentals are tight with the shipments from Indonesia being restricted,” and that the situation was likely “to play out for a bit longer.”

Indonesia is Southeast Asia’s largest economy, one of the most promising of the emerging markets, as well as one of the world’s largest democracies. Recently-imposed regulatory measures on tin are expected to cause a supply-jam resulting from slower export rates and could also affect smartphone manufacturers and other companies and industries that use the metal.

The jump for tin, amounting to a nearly 2 percent gain on the week, also substantially lifted prices for copper and nickel.

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Symbol Name Price Change % Volume
BCS Barclays PLC ADR 10.09 -0.11 -1.08 3,649,595

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