Indonesian tin hold off selling...

Tin producers in Indonesia, the largest exporter, are holding out for sales of the metal above the benchmark spot rate in London to try to counter a decline in prices to the lowest level in more than a year. Futures rose.

“It’s a semi-moratorium,” Indonesia Commodity and Derivatives Exchange Commissioner Fenny Widjaja said in an interview in Jakarta. Smelter members on the ICDX were offering metal at $500 to $600 a metric ton above the contract on the London Metal Exchange, Widjaja said by phone yesterday. That’s more than the $398 premium paid at the end of last month.

The ICDX is the only exchange in Southeast Asia’s largest economy that’s permitted to trade the refined metal used in packaging and electronics before it’s exported. Tin in London retreated by the most in more than a year in August as stockpiles expanded for a fourth month. The Jakarta-based exchange had transacted no tin this month until yesterday, when cargoes of the metal were sold above the London price.

“Indonesian sellers are not prepared to follow the LME price down,” Peter Kettle, a research manager at St. Albans, England-based industry group ITRI Ltd., said by e-mail yesterday. “I think there is a similar thing happening in the Chinese domestic market, where business is extremely slow.”

Tin for immediate delivery fell 4.4 percent on the LME in August, and extended losses to $20,897 a ton on Sept. 9, the lowest close since July 2013. The metal increased 0.4 percent to $21,043 yesterday as trades on the ICDX totaled 1,150 tons, with 1,005 tons sold at $21,515 a ton and the balance at $21,615. Three-month futures rallied as much as 1 percent to $21,280 on the LME today, and traded at $21,200 at 7:54 a.m. in London. ‘More Strength’ “

They’re pulling it out there to just see how the market reacts,” David Lennox, a resource analyst at Fat Prophets, said from Sydney today. “If there’s no real violent reaction to what they’re wanting to do, then that’s an indication that there’s a little more strength in the market than we thought.” The weak trade on the ICDX was purely because of the price, Jabin Sufianto, chairman of Association of Indonesian Tin Exporters, said by e-mail yesterday. The association groups 18 smelters of the 22 that trade through the bourse. “Smelters don’t want to sell cheap because ore prices are very high,” said Widjaja. “Smelters prefer to build up stockpiles with the current low price, on expectations that it will rise to a decent level, probably at $23,000.” Minimum Price

The ICDX sets a daily minimum price for tin contracts, with an exchange committee agreeing the rate. Sales made through an auction system can’t be made below the daily level, which is officially known as the Suggested Opening Bid. The government made exporters trade through the exchange in an effort to challenge the dominance of the LME benchmark. Trade on the ICDX totaled 4,855 tons in August, 3,810 tons in July and 4,660 tons in June, exchange data show. Before yesterday, the last trade was on Aug. 27, when the PB300 contract, the most active, was at $22,080 a ton. That was $398 above the LME spot price that day, Bloomberg calculations show. Inventories tracked by the LME climbed 4.4 percent to 12,295 tons in August. The reserves dropped 1,085 tons to 10,210 tons yesterday, the lowest since May, according to LME data compiled by Bloomberg.

Global demand for tin will outstrip supplies for a fifth year in 2014, BNP Paribas SA said in May report. The market will have a global deficit of 13,000 tons this year and 10,000 tons in 2015, according to the bank.

To contact the reporter on this story: Yoga Rusmana in Jakarta at [email protected] To contact the editors responsible for this story: James Poole at [email protected] Jake Lloyd-Smith, Thomas Kutty Abraham

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