Tin shipments slumped 22% in May; April rebound short-lived

JAKARTA (Scrap Monster): The official statistics released by the Indonesian Trade Ministry suggests sharp fall in tin shipments by the country during the month of May this year. The exports have dropped by 22% over the previous month. When compared with May last year, the exports were down by almost 14%. The Indonesian Tin exports totaled 5,378 tonnes during the month. The Ministry data also indicates that 5,390 tonnes of tin were traded on the Indonesian Commodity and Derivatives Exchange (ICDX). The ICDX traded volumes during the month declined by 25% month-on-month.

Exports- April ’16

The Indonesian tin exports, after reporting a weak first quarter, had rebounded sharply during the month of April. The exports during the month were up by 36% over the previous year. The surge in exports was mainly on account of some producers receiving fresh export licenses. The new permits resulted in sale of accumulated stocks including the stocks at PT Refined Bangka Tin which had earlier stopped refining operations due to environmental concerns.

The exports during Q1 dropped mainly due to government audits on tin smelters, in an attempt to curb illegal mining activities. The new government regulations had made it necessary for smelters to prepare fresh documentation. In addition, floods too had impacted production during the quarter.

Exports-March ‘16

According to Trade Ministry data, the country exported 2,719 tonnes of tin during March this year. This is significantly down by almost 61% when compared with the exports during the same month a year before. The Indonesian tin exports had totaled 6,900 tonnes during March 2015. The volume of refined tin traded on the ICDX during March this year amounted to 2,655 tonnes.

The exports during March this year were constrained by several factors. Firstly, the difficulties and delays in renewing export permits have affected shipments. Heavy floods in Bangka region left many smelters and mining areas unreachable. The disruption of electricity in flood affected areas too has affected smelter operations. Audits by smelters too contributed to the sharp fall in exports.

Heavy floods in Bangka region had resulted in limited access to smelters and mining areas. Many areas had also reported electricity disruptions. Incidentally, PT Timah had to shut down its Nudur mining area on account of heavy floods.

Export Forecast for 2016

According to forecasts by state miner PT Timah and the Association of Indonesian Tin Exporters (AETI), the country’s tin shipments are likely to range between 60,000 tonnes and 66,000 tonnes in 2016. The exports during the initial five months have just totaled around 22,000 tonnes. For the exports to touch the upper range of the forecast, the monthly exports should well exceed 6,000 tonnes per month during the remaining seven months of the year. Yearly exports at 66,000 tonnes would be 5% drop from 2015. Also, this would be the fourth consecutive year of decline for the country’s tin exports.

Price Outlook

The tin prices which rose sharply during the initial quarter of the year have consolidated during the month s of April and May. The upside in tin prices is likely to be capped with the return to normal service by the Indonesian tin exporters. Also, the prices are very much dependent on US dollar movement. The tin prices are likely to gain with weakness in UD dollar. Actions by Central Bank to strengthen dollar may have bearish effect on tin prices.