nsw tin

NEW YORK, July 26 (Reuters) - U.S. tin premiums have risen steadily as dealers price in prospects of tighter supplies and healthier demand in the second half of the year.

"One thing that is fairly certain is that nothing has changed on the supply-side of the equation ... supply is not increasing," said one physical tin dealer.

"There is a genuine supply problem in tin ... there's no new production anywhere, or it's not coming on stream for a couple of years," the dealer added.

Due to a limited supply base and underinvestment in new mine capacity, the physical market has remained tight, with supplies of the metal used in lead-free solder about a quarter percent below their 2010 peak. <0#LME-STOCKS> (Graphic: link.reuters.com/fac82s )

Premiums for grade A material, which contains 99.80 percent tin, were quoted in a $650 to $750 per tonne range, off from their peak in April at $700 to $750.

Premiums for low-lead tin were said to be in a $800 to $900 range at the start of the third quarter, compared with a yearly high in April at $900 to $925 when the London Metal Exchange (LME) three-month tin price CMSN3 mounted a charge to a record $33,600 a tonne.

Since then, prices fell victim to a cross-commodity rout in May, sinking to their lowest levels since November 2010.

"People are just buying when they need it. Nobody is buying forward, and nobody really bought forward when the market bottomed out," another dealer said.

"It signals that people are not sure where the market is going. But as demand starts to come back and we get out of the summer doldrums, prices will go up and premiums will follow because the financing goes up."

In the Reuters mid-year base metals poll, the consensus of 22 analyst forecasts expected the cash tin price CMSN0 to average $29,124 this year, up from $27,000 forecast in a January survey, due to lingering supply constraints.

For 2012, the average of 21 forecasts was $30,423. [ID:nL6E7IL19V]

When compared with other base metal markets, tin is small, with annual production in 2010 estimated at around 350,000 tonnes.

China and Indonesia, two of the world's largest producers, have struggled to maintain output as lower market prices forced curbs in new mine investment.

Even after a 35.4-percent spike in Indonesian refined tin exports in June, analysts doubt the current supply chain will be enough to meet rising demand. [ID:nL3E7IB0SO]

"Despite high prices, it is hard to see tin production growing much faster than demand in 2011-12," Stephen Briggs, an analyst at BNP Paribas.

"The list of new mine projects is expanding but most are small and few will make a contribution before 2013 ... and we doubt the two dominant countries, China and Indonesia, will be able to produce more than 100,000 tonnes each in 2011," he said.

Australian miner Venture Minerals (VMS.AX) plans to start tin production from its Mount Lindsay project in Tasmania in 2013, producing 2,500 tonnes to tin per year, less than one percent of global output. [ID:nL3E7GB0E3]

Briggs forecast world tin mine production would rise by no more than 7 percent between 2010 and 2012. (Reporting by Chris Kelly; Editing by John Picinich)

http://www.reuters.com/article/2011/07/26/physical-tin-idUSN1E76P0EI20110726



This could be a nice welcome suprise if they come up with anything substantial.