INDONESIA – Following the implementation of a new law that requires tin be traded on a local exchange before shipment restricted cargoes, Indonesian tin exports have dropped to the lowest levels in six years.
According to data from the Trade Ministry, shipments of tin, used in packaging and smartphones production, fell 88% to 786 metric tons in September 2013 from the previous month – the lowest figure since at least February 2007 when the government started tracking exports.
The new law was implemented on 30 August with the aim of pushing Indonesia – the world’s largest tin exporter - forward to displace the London Metal Exchange to become the country setting the benchmark price for tin. Under the new rule, 47 registered tin ingot exporters must trade on a domestic exchange – the Indonesia Commodity and Derivatives Exchange (ICDX) in Jakarta - before shipping material.
State-backed PT Timah (Persero) Tbk’s president director Sukrisno said the objective of the rule “is how we can create a reasonable price”, even as the company halted shipments and declared force majeure on shipments last month because its customers had not registered with the domestic exchange.
PT Timah, which accounts for 30% of Indonesian tin exports, recently changed its contract terms for ‘force majeure’ to apply under Indonesian law, including a clause that stipulated it could call force majeure if regulator changes affected their usual shipments.
Despite the current difficulties, Sukrisno remains confident: “Timah’s sales volume may drop this year but that’s fine. Our stockpiles will increase and prices will also gain. Hopefully, tin can reach US$25,000 (a ton) by December.”
As of 7 October, the tin price per ton was US$23,500 on the London Metal Exchange.