Tin shortage likely in two years as output falls
Tin shortage likely in two years as output falls
HONG KONG (Bloomberg): The world is heading towards a shortage of tin in two to three years as output declines in Brazil and Indonesia, leaving China to fill the gap, industry officials said.
"Indonesia is over-mined and Brazilian production is declining" after excess output in the last few years, said Edwin L. Arnold, minerals strategist at Prudential-Bache International Ltd., a clearing member of the London Metal Exchange.
Other leading producers such as Malaysia and Thailand don't have capacities to boost output either, he said on the sidelines of a Metals Bulletin conference. China, the world's largest producer, is the only country that can meet the deficit, he said.
Tin is used to make packaging cans, soldering material in the electronics industry and as chemical additives.
Excluding China, world refined tin output totaled 148,000 tons in 1999, with Indonesia producing 48,000 tons and Brazil 12,000 tons, according to the World Bureau of Metal Statistics. Malaysia produced 27,000 tons and Thailand 18,000.
Chinese output surged 16 percent to 92,325 tons in 1999 as small producers started production to take advantage of stable tin prices.
Still, China is unlikely to boost output, said Xiao Jianming, general manager of Yunan Tin Corp., the country's largest producer.
Production may actually decline this year as the government shuts old plants breaking pollution control rules and tightens regulations after decades of uncontrolled mining caused environmental damage.
The government is also unlikely to expand the country's export quota as it aims to keep prices stable, said Xiao. Tin prices for immediate delivery have slumped from an 18-month high of $6,144 a ton in January to $5,451 yesterday.
"We're happy with $5,600 a ton," said Xiao. "If its too high small producers will come back again, if it's too low the big producers are hurt."
Yet, China may eventually have to expand output if a shortage arises in two years time, traders said.