Reuters reported that scarcity of available high quality tin in Europe is expected to increase by the Q1 potentially forcing customers to pay a higher price for physical metal at a time when some shipments from major exporter Indonesia are being cut.
Traders said that premiums paid to secure high grade tin could rise by around USD 50 per tonne to USD 700 per tonne in the next 2 months as business picks up after the summer with a disruption from Indonesia's largest miner PT Timah exacerbating tight supplies.
Premiums for the metal used in electronics have remained steady in Europe since the start of the year having last touched USD 750 per tonne in November but gains beyond that level are likely to be capped by concerns about Europe's weak economy.
PT Timah said that this week it had stopped selling tin on the spot market because of low market prices for the metal cutting shipments this month from the world's leading exporter. That announcement from Indonesia is making people a bit nervy as the market is tight anyway. Tin premiums have been pretty steady over the last 6 months to 9 months and usually when we get into a long stable period we do expect them to start rising."
A tin trader said that high grade material is hard to come across and if you have got it, you will do well to hold on to it. They the premiums have been quite stable but we do expect them to rise to around the USD 700 level by September or October.
PT Timah's announcement helped benchmark prices for tin on the London Metal Exchange jump by 2.3% on Tuesday. Cash tin swung into a premium of USD 13 over three months futures on Wednesday from a $16 discount previously an indication of a tightening market. While the firm said it mainly exports to countries in the Asia Pacific region, some of its high grade material tends to also attract demand from the European market.
European tin trader said that "Indonesian material if it's good enough it can make its way to Europe. PT Timah material is high grade so if they're stopping their spot deals you could potentially see premiums go higher.”
Sustained gains to premiums are unlikely as the medium term demand picture for tin is bearish due to a deteriorating outlook for the global economy. After strong gains early in 2012, when three month tin futures touched their highest level in seven months to near USD 26,000 per tonne in February, tin shed 17% of its value in the Q2 and dropped to a 10 month low at USD 17,125 per tonne in late July.
Source - Reuters
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