Tin to get costly on supply woes

Prolonged supply disruption in Indonesia will result in major depletion in global tin stocks, pushing up prices further in the April-June quarter and beyond, a report from metal consultants CRU-ITRI said.

The report forecasts global tin supply deficit of 30,000 tonne, assuming that ongoing disruptions in Indonesia, and partly in Bolivia, will end soon.

"However, visible stocks will be drawn down steadily over the coming months and if there is no real progress in freeing up the Indonesian supply soon, there is still plenty of upside potential for prices in the second quarter and beyond," Peter Kettle, ITRI's manager (statistics and market studies) said.

The fall in Indonesian supplies may be partly offset by small increases in other parts of the world, the report said. Demand for tin is seen rising, albeit at a rate slower than the growth seen in the last few years, the report said.

The Indonesian government has closed down around 20 independent smelters since October, and recently arrested three senior officials of PT Koba, the country's leading tin smelter, on allegations of illegal mining.

On the other hand, the Bolivian President Eva Morales' decision to nationalise Switzerland-based Glencore AG's Vinto smelter has increased uncertainty over tin supplies from the South American nation.

Tin prices on the LME have risen to over $13,000 a tonne this year on continued uncertainties over supply.

However, in inflation-adjusted terms, prices are still below the $35,000 a tonne level of the late 1970s and early 1980s, the report said.