Traders see tin prices rising

Traders see tin prices rising

SHANGHAI (Dow Jones): Reduced tin exports from China will tighten supply of the metal in Asia, possibly pushing prices higher later in the year, traders said.

Tin exporters in China have exhausted their licenses to export for the year. They are hopeful the government will issue more licenses. However, unless prices improve, the authorities are unlikely to do so, traders said.

Many end-users in Asia have few alternative supplies in Asia because Indonesia, the other major producer and exporter in the region also doesn't have enough material.

"I will need to buy (tin) later in the year, but with China not issuing more licenses, there are few options," said a Tokyo- based trader.

China is the world's largest producer of tin and one of the largest exporters. It exported 53,420 metric tons of tin in the year to Aug. 31. In 1999, it exported 64,685 tons.

Global tin output in 2000 is expected to be around 250,000 metric tons, according to Standard Bank London's research division.

Industry participants said tin prices could spike later in the year to as high as $6,000 a metric ton, with some participants expected to buy heavily later in the fourth quarter of the year, the Tokyo-based trader said.

Three-month tin price on the London Metal Exchange was trading at $5,355 a metric ton at 0100 GMT Monday, sharply lower from its Jan. 6 peak of $6,175/ton.

Tin prices haven't been reflecting the lack of tin from China because many regional end-users, particularly in Japan, have been running down inventory, the Tokyo-based trader maintained.

"The exhaustion of the export licenses will certainly underpin prices," said Robin Bhar, head of base metals research with Standard Bank London in London.

But Bhar cautioned that any spike may prompt Chinese authorities to issue more licenses.

Indonesia's PT Timah, the world's single biggest tin producer, said it can't meet spot demand and is referring buyers elsewhere, a spokesman said.

PT Timah has cut its production estimates for 2000 to 35,000 tons, from initial estimates of 40,000 tons. As a result, it has pared supply agreed under long-term supply contracts to buyers by 5 percent across the board this year.

"We are referring them elsewhere to buy tin, mostly to China," said the spokesman.