Thought this may interest some of you .Looks like some raw materials are sourced from other countries ,thereby increasing operating costs for Yunnan.Reference also made that they have no capacity to increase mine supply .
CHINA'S Yunnan Tin Co, the world's largest maker of the metal, said first-half net profit rose 33.7 percent on higher selling prices and volume.
The firm earned 362.4 million yuan (US$53 million), or 0.56 yuan a share, in the first half, it said in a filing to the Shenzhen Stock Exchange yesterday. Sales rose 53.5 percent to 5.66 billion yuan.
Tin, used in electronic solders and for corrosion resistance for other metals, has risen 43 percent in London year-to-date, thanks to reduced supplies from China and Indonesia, the top two producers.
Still, some analysts said Yunnan Tin's half-year results fell short of their forecasts as tighter export tax policies and the rising Chinese currency eroded profit margins.
BOC International analyst Le Yukun cut the earnings forecast for Yunnan Tin during 2008 to 2010 by 5 to 7 percent, as the interim results only accounted for 44 percent of its earlier full-year projection.
China imposed a 10 percent export duty from January 1 this year on refined tin to curb a record trade surplus and cut capacity in energy-intensive industries. Sales in overseas markets, which account for 36 percent of the firm's total, rose only 29.4 percent, versus a 71.7 percent jump in home market.
Changes in export taxes and the yuan's appreciation affected its earnings by 240.5 million yuan during the reporting period, Yunnan Tin said. The full-year impact from the two factors may be limited to 400 million yuan, as yuan's growth may slow in the second half, according to a China Merchants Securities research report.
The shrinking of the export market could lead to fiercer competition in the domestic market, thus further reducing profitability, Yunnan Tin said. The firm's operating costs surged 54.9 percent to 5.23 billion yuan in the first half, due partially to higher tin prices which added to its external sourcing costs.
Analysts said the company did not have a significant growth in its mining capacity and needed more mines to boost margins.
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