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Malaysia Smelting Sees ‘Extreme Tightness’ in Tin Stockpiles
Nov 9,2011 10:41CST
industry news
Malaysia Smelting Corp., the world’s second-biggest tin producer, said it sees “extreme tightness” in global tin stockpiles because of the Indonesian export ban.

Nov. 9 (Bloomberg) -- Malaysia Smelting Corp., the world’s second-biggest tin producer, said it sees “extreme tightness” in global tin stockpiles because of the Indonesian export ban, according to Group Chief Executive Officer Mohammad Ajib Anuar.

"We foresee the overall supply and demand situation to still remain in deficit because of the supply constraint, mainly driven by the export ban in Indonesia,” he said in an online presentation to analysts and the media. The company still forecasts a deficit of around 9,000 tons, or about 3 percent of annual production, Mohammad Ajib said.

Industry group ITRI Ltd. expects the world to be short of 11,100 metric tons of refined tin this year as producing countries such as Indonesia, China and Peru are struggling to meet demand for the metal, used to solder components in almost all electronic equipment. Tin climbed to a record $33,600 a metric ton on April 11. The metal for three-month delivery traded at $22,100 a ton today.

Tin plunged 17 percent in September on concern that Europe’s debt crisis may derail the global economy, prompting Indonesian smelters to suspend exports from Oct. 1 to try to drive prices to $25,000 per metric ton. The country represents more than 40 percent of global exports, according to Peter Kettle, research manager at St. Albans, England-based ITRI.

Export Ban
The export ban has established a short-term floor price of $21,000 to $22,000 a ton, and a ceiling price of $24,000 to $25,000 a ton, Mohammad Ajib said. In the long term, prices would rise from the current levels, as new supply will come from mines with higher production costs, he said.

The ban that started last month may cut inventories monitored by the London Metal Exchange to about 10,000 tons by the yearend, Kettle said on Oct. 29. Stockpiles of the metal used to make solder have slumped 29 percent since Sept. 30 to 15,130 tons, the lowest level since November last year, according to Bloomberg data.

Producers would continue to engage with the government of Bangka Belitung, a key production area in Indonesia, and the federal government to address the voluntary export ban issue, Mohammad Ajib said.

The export ban would be “negative” to producers as production costs and payments to contractors still had to be met, he said. Malaysia Smelting owns 75 percent of Indonesia’s PT Koba Tin, while the rest is held by PT Timah, the country’s largest producer.

Malaysia Smelting posted a third-quarter profit of 41.8 million ringgit ($13.4 million) compared with a loss of 37.1 million ringgit a year ago, it said in a statement to the stock exchange today. Revenue advanced to 907 million ringgit from 720 million ringgit, it said.

The operating environment in the current year is expected to be “difficult and challenging” because of the weaker demand for commodities arising from the global economic slowdown following the sovereign debt crisis in the Euro region, Mohammad Ajib said. The group expects to remain profitable in the fourth quarter, he said.


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