Timah to keep tin output around 34,000 tons in 2001
Timah to keep tin output around 34,000 tons in 2001
SINGAPORE (Dow Jones): Indonesia's PT Tambang Timah will maintain its tin ingot production around 34,000-35,000 metric tons in 2001, barely changed from last year, as tin prices have been at an acceptable level so far, a company executive told Dow Jones Newswires Wednesday.
"The average tin price (for long-term contracts) this year should be around $5,300 a metric ton, which is OK for us," Timah marketing manager Unang Rusnandi said.
The world's largest tin producer said in February that it might trim production if tin prices showed further downward movement.
Rusnandi acknowledged that this year's price in the physical market has declined from that of last year, but he didn't provide comparative figures.
The company sells over 60 percent of its annual production through long-term contracts.
Rusnandi said Timah sees higher tin demand from Europe this year, and may shift some production there from for the U.S., where slower economic growth has reduced tin demand.
"We have new buyers in Europe this year," he said.
Timah usually allocates about 22 percent of its production to Europe and an equivalent amount to the U.S.
Asian countries, particularly Japan and South Korea, are its biggest markets and account for half its production.
The remaining 6 percent of production is for domestic sales.
But higher demand in Europe may be capped by a weaker euro against the U.S. dollar, Rusnandi said.
Timah is studying the possibility of delivering its tin ingots to the London Metal Exchange once Singapore LME-registered warehouses are allowed to carry tin in 2002, Rusnandi said.
"A major advantage to deliver to LME warehouses in Singapore is lower freight costs," he said, adding that the company will conclude its study by June.
Major LME-registered warehouses that carry tin are in Rotterdam and Barcelona.
Freight costs from Timah's smelter in Indonesia to Europe are double those from the smelter to Singapore, according to Rusnandi.
Singapore is situated near major tin producers in Indonesia and China.
Timah has two major brands for its tin ingot products - Banka, with a purity of at least 99.9 percent, and Mentok, which has a purity of 99.85 percent.
As it is a high grade, Banka is qualified to be a LME- registered brand, Rusnandi said.
If Timah decides to deliver to the LME, it will set up a trading arm, he added.