Driven by strong fundamentals and short-covering, tin sparkled to a 17-year high on Wednesday on the London Metal Exchange (LME) with the price picking up to $11,460 in early trade, a gain of 2 per cent from the previous day. | |
| Analysts were keeping a close vigil on the US housing data for further price direction. The metal, known as an independent mover with little correlation with other metals in the LME basket, surged by $200 to touch a high at $11,300 for delivery in three months, the highest since 1989. |
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| The metal, used in soldering of electronic components, has gained 73 per cent in the past 12 months from $6,595 on January 3. It gained more than 70 per cent in the Mumbai non-ferrous metals market this year from Rs 374 a kg on January 3 to Rs 592 a kg on December 27. |
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| Tin is also used in cans, alloys and glass production. Despite higher prices, traders remained sceptical to offload the metal amid higher demand from consumers on the LME floors. The rise in demand for more metals is mainly because higher supply worries from Indonesia, the world's largest tin producer. |
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| But, pessimists-turned-optimists were unwilling to sell their stocks resulting in a lower trade on Wednesday.Only 16 lots of five tonne each were traded in the morning session, as compared with the average trading of about 500 to 800 tonne in the normal trading days, which was mainly exacerbated to thin presence of traders in the post-Christmas holiday trading and their reluctance not to empty their stocks. |
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| The metal witnessed the smallest volume of trade on Wednesday on the LME. |
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| Attributing this sudden spurt to the Indonesian government's move to clamp down all unlicensed mines, an analyst said that the move would hamper the supply in the long run. Although inventories are currently on the higher side, the supply disruption would force the stocks to exhaust very soon, he said. |
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| Citing a lack of proper licensing, Indonesia's government shut down around 30 small-scale independent smelters in October, prompting the LME prices to jump by 21.5 per cent in the short span of three days to a record $11,000 a tonne. |
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| Indonesia produces around 120,000-130,000 tonne of tin annually out of a total global production of 350,000 tonne. |
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| Experts believe the Indonesia government's decision is very hard, which may impact the global supply in as quick as two months from now. |
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| An analyst believed that the problem in Indonesia is more serious than what the market realises. |
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| The country has lost almost two months of overall production, which would be hard to compensate even if the government decides to open these mines again, as it would take two months to see the first lot of production from the day of decision. |
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