New regulations on the quality of refined tin exported, which came into effect on 1 July, are expected to slash shipment volumes in the next two months, according to sources quoted by Reuters. From this month all tin exports should be 99.9% tin with a maximum 100 ppm lead content. Five industry stakeholder contacted by Reuters forecast an average figure of some 5,000 tonnes for July exports, compared to an average of close to 9,000 tonnes a month up to May this year. August shipments are also expected to be lower.
“You will see exports plummet in July and August, and after that I suspect there will be some leakage and ways will be found around it,” said analyst Stephen Briggs of BNP Paribas in London. “In the meantime it’s going to make the tin market a bit jumpy.”
“We think 2013 exports will be 70,000 to 75,000 (tonnes) only … unless the smelters can avoid that regulation,” PT Timah corporate secretary Agung Nugroho told Reuters.
Meanwhile the Indonesian government reiterated its priority was to “move up the value chain”. Trade Minister Gita Wirjawan said he was not concerned about a temporary decline in shipments. The expectation is that exports should recover soon enough as local smelters adjust to the new rules. “In the short-term, exports will drop, but by next year people will have started to look for ways to comply,” said Sukito Gunawan, director at private smelting company DS Jaya Abadi.
Sources contacted by Reuters also speculated that the Indonesia Commodity & Derivatives Exchange (ICDX), which launched a physical tin contract in 2012, could be made a pricing reference point under the regulation. The ICDX INATIN contract is based on 99.9% tin, although the maximum lead content specified is 360 ppm. The contract has also been dormant throughout 2013, the last recorded trade being 3 lots on 13 December last year.
