Tin surpasses $11/lb for first time ever

By Tom Stundza -- Purchasing, 5/14/2008 9:52:00 AM

Statistical news releases in China and Indonesia are confirming supply limitations for tin, triggering a London Metal Exchange (LM) price above $25,000/metric ton ($11.34/lb) for the first time, reports Peter Kettle, head of research at ITRI, a producer-funded tin organization in St Albans, England. Actually, spot LME tin was $11.52/lb on Tuesday—as compared with an average $8.49 in the January-April period.

China’s National Bureau of Statistics says April production of refined tin was 0.5% lower than in the same month of 2007, adding that four-month production of 42,183 metric tons was 11.9% down. Preliminary data reported Bloomberg indicates that Indonesian tin exports may have fallen 8.7% in April at 7,858 metric tons from 8,606 metric tons in March. Meanwhile, executives at Indonesia's state-controlled tin company PT Timah tell reporters this week that the firm’s inland production has been adversely affected by competition from independent smelters, 16 of which now have export licenses.

Interestingly, while supply/demand factors do support firm prices, “there is no doubt that the rapid recent rise is driven mainly by investment fund activity,” Kettle writes in an e-mail today to the website’s online clients. He says traders wouldn't be surprised to see the LME price get to $28,000 or $29,000 ($12.70 or $13.15), but there will come a point when the price bubble will burst.