The South Bangka government of Indonesia announced on 8th Oct that small scale tin miners could resume production, after completing all permits, following a protest over recent government action against small-scale smelting. The restart of these mines and smelters, which have been closed since August, will weigh upon the tin price in the short-term. The Bangka-Belitung Timah Sejahtera consortium smelters could represent a return of some 2,800t/month of tin production capacity, but will run at 30% capacity for the time being.

We expect Indonesia's refined tin exports will nevertheless be boosted as a consequence of these small-scale re-starts. Indonesia's tin exports dropped 29% year-on-year and 8.2% month-on-month in September, to 7,755t. Refined tin exports from Indonesia in January to September this year stood at 75,552t, compared with 75,535t in the same period in 2008.

Ultimately, 2009 overall could see Indonesia's total tin exports are likely to be under 100,000t - in any normal circumstances this would be taken as a bullish signal for tin prices, but such is the depressed state of global tin demand that it will probably be shrugged off. We estimate world tin consumption is likely to fall by about 9% year-onyear in 2009, to 320,000t, due primarily to weakness in the electronics sector.

In 2H 2009 demand has picked up in both solders and tin chemicals, while tinplate demand has remained relatively steady throughout the recession. However, we still believe that the tin market is over-supplied, as implied by rising LME inventories, which have climbed steadily since June, and falling cancelled warrants.

Tin Outlook

We forecast a 20,000t tin supply surplus in 2009, but expect the price to find support from shortage of physical metal available for prompt delivery, due to a dominant position holding more than 90% of warrants on the LME. How this unwinds - or is sustained - in the coming months will be a factor in the price movement. Short-term LME three-month price: $13,500/t- $15,250/t.

Tin News

Oct 14th: Seven Indonesian tin smelters will restart operations, after shutting in August 2009 due to lack of feedstock, following the government crackdown on illegal tin ore mining. Indonesian tin exports were 7,755.3t in September, down 29% month-on-month.

Oct 9th: The Democratic Republic of Congo asked metals groups AMC and Traxys to resume purchases of tin ore, after backing an industry effort to ensure revenues from the sector do not fund conflict. AMC suspended purchases of the ore from the DRC in September; Traxys stopped sourcing minerals from the region in May.

Oct 6th: Bolivia's Vinto smelter will increase refined tin output to 10,500t in 2009 and begin a major expansion in 2010, raising production capacity by a theoretical 27,000t/y. Vinto produced 9,544t of refined tin in 2008.

Courtesy: Fortis Metals Monthly

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