Nickel jumped to a nine-week high in London as investors purchased the metal to close out bets on mounting concern that ore exports will be halted next year from Indonesia, the world’s largest producer.
Tin exports from Indonesia, the world’s largest, plunged to the lowest level in at least six years as a new rule requiring that the metal be traded on a local exchange before shipment restricted cargoes.
Futures advanced 5.5 percent to $24,000 a ton on Oct. 4, the highest price since March. Tin has outperformed the five other main base metals on the LME over the past 12 months, including copper, aluminum and nickel.
Indonesia, which produces more than one-third of the world’s tin, began last Friday requiring exporters to sell through local exchanges. By steering trading away from London, the center of the global tin trade for almost 140 years, Indonesia hopes to gain more control over the price of one of its most valuable commodities.
Tin for delivery in three months rose 1.7 percent to $22,250 a metric ton by 10:50 am Thursday on the London Metal Exchange. A close at that level would be the highest since April 11. Prices climbed above the 200-day moving average at about $22,042, an indication to analysts who study technical charts of potential further gains.
Indonesia’s efforts to control the tin trade reverberated through the market for the metal, sending prices soaring as mining companies halted shipments and some investors bet on a global supply shortfall. Today, tin rose 4% on the London Metal Exchange to $22,940 a metric ton. Prices are up nearly 9% this week
As we were mentioning in Aluminum: China is running out of bauxite, in May, Indonesia asked all mining companies to either build their own processing capabilities locally or partner with companies able to do so, knowing that by 2014, exports of raw minerals, including bauxite, would be forbidden. Indonesia‘s goal is to derive more revenue from its mining sector.
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According to the World Bureau of Metal Statistics, the global aluminum market was in oversupply by some 1.23 million tonnes in the first nine months of 2013, following a surplus of 539,000 tonnes for the whole of 2012. It’s this quantity of metal above ground which drove prices this week to their lowest value since mid-2009.
Commodity markets volatility from coal to nickel and tin, which climbed to the highest level in more than six months after the Indonesian government restricted exports, is the direct result of Indonesia’s attempts to ease a record current account deficit by boosting revenue from its mining industry.
Tin price on the Kuala Lumpur Tin Market (KLTM) closed slightly higher with a US$50 increase to US$22,950 a tonne today on renewed buying support. The price increase was in tandem with the rise on the London Metal Exchange (LME), where tin price rose by US$170 to settle at US$22,995 a tonne.
Indonesian tin exports have plummeted due to the Indonesian government’s efforts to try to control the tin trade through new regulation. As a consequence, the electronics industry is starting to worry for its supply.
Tin is mainly used for soldering mobile phones and computers electronic circuits, but it’s becoming a rare commodity. Indonesia, the first tin exporter, representing a quarter of the world production, has strictly limited its exports to try, once again, to raise the metal price.
It has first only allowed high purity tin to leave the country. Then, since the end of August, the government has been forcing buyers to go through a new Indonesian Stock Exchange, to circumvent the metals market in London, which it accused of speculation.
Nickel producers face a global surplus of 140 000 t this year due to disappointing demand and new production projects, a monthly bulletin from the International Nickel Study Group (INSG) forecast on Thursday.
The nickel surplus is a 40% increase from 2012 and INSG predicts that the excess supply will continue into next year, albeit at a lesser amount of 120 000 t. It added that 2014 figures could also be hit by the introduction of Indonesia‘s export ban on nickel ore.
Benchmark Rubber prices in Tokyo have rallied 21 percent since the 2013 low in late June and were around 275.6 yen $2.84 per kilogram in Asian trade on Wednesday. The main contract on the Shanghai Futures Exchange has also rallied from its low in early July, gaining 21 percent to trade around 20,730 yuan $3,387 a tonne.
The worst may be over for Asian natural rubber prices as stronger economic growth in China and globally boosts demand for vehicle tires, but there are still risks to calling for a sustained price rally.