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Tin market uncertain as new export rules begin

Keywords: Tags  tin, exports, Indonesia export regulations, LME, London Metal Market, Claire Hack

LONDON — Tin market participants are expecting an uncertain summer as new export regulations go into effect in Indonesia.

The Indonesian government has decreed that exported material must have a tin content of at least 99.9 percent, and that ingots may be shipped only by registered exporters approved by the trade ministry.

"I think the brunt of the effect will come by the end of August (after Ramadan)," a trader told AMM sister publication Metal Bulletin. "I think every ounce of primary tin probably left Indonesia by June 30," before the regulations went into effect July 1.

The question is how the new regulations will be enforced, as it is possible some companies will try to circumvent them, the trader said. "They could find creative ways of honoring long-term contracts, although I’ve seen no evidence of that yet."

The new export regulations have already had an effect on tin prices on the London Metal Exchange, climbing July 2 from an opening price of $19,711 per tonne to an official price of $20,270 on a three-month basis.

"Although the (changes) were well expected, they have moved tin. It’s gone up about $600. It had been rumbling along the bottom (previously)," a second trader said. "Over the next month or two, we will see how much the regulations affect 99.9-percent material. It could well cut exports by 50 percent."

Indonesian tin exports in the first five months of the year jumped 18 percent from the same period last year, according to the second trader. "At the end of July or the beginning of August, we will start to see whether any material comes out from other sources (instead of Indonesia)," he said. "I think the smaller producers (in Indonesia) will struggle with cash flow, and that means the export rules could become hard to enforce."

A version of this article was first published by AMM sister publication Metal Bulletin.

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