Tin prices are setting a record

By Tom Stundza -- Purchasing, 4/16/2008 11:46:00 AM

Tin futures rose for a third day this morning to a record $9.66/lb on several exchanges as China and Indonesia, the world's largest producers, appear to be restricting supplies, according to a Bloomberg report. The alloying, soldering and plating metal’s spot price rose to a new all-time high of $9.66 on the London Metal Exchange (LME), giving it a 30.0% gain on the year.

Yunnan Tin Co., the world's biggest producer and based in China's southwestern province, has halted shipments because of a lack of buyers willing to absorb China’s new and higher export duty. Indonesia, the world's second-largest producing nation, is reported to be capping production at 100,000 metric tons this year and next to extend mine life and limit damage to the environment.

Tin prices have surged 46% in the past year amid rising demand for the metal used in soldering in China and a crackdown on illegal mining practices in Indonesia. China has been a tin net importer since August 2007 and is likely to remain that way for a time, “further tightening global supplies after what happened in Indonesia,'' said Cui Lin, an analyst with Beijing Antaike Information Development Co., by phone to Bloomberg from Beijing.

Forbes.com says that tin inventories have been increasing since the end of 2007 but prices are going up nonetheless on worries of potential output cuts from key suppliers along with large pools of speculative money moving into commodities to hedge against inflation and the weak dollar.