The article talks about the fall in tin shipments from Indonesia due to new purity standards, which has resulted in the continuously rising tin prices. The fall has been forecasted and is considered to be the largest since January 2012. However, this is an advantageous situation for tin project developers like Stellar Resources as the demand for tin is growing. In fact, Stellar’s recent pre-feasibility study demonstrated technical and economic viability of its Heemskirk Tin project in Tasmania.
The article supports its analysis by providing a brief summary of Macquarie’s research findings that show the rise tin usage.
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Export statistics released on 19 August showed that Indonesian shipments of refined tin declined by a more than expected 42 per cent month on month to 6,466 tonnes in July 2013. Indonesia accounts for 34 per cent of the world’s supply of refined tin, and July’s drop is the biggest decline in shipments since the 64 per cent weather-related decline in January 2012.
The 42 per cent July decline compares with an expected reduction of 24 per cent following a change in regulations by the Indonesian authorities. The changes that came into effect from 1 July 2013 required an upgrade in specifications for refined exports from 99.85 per cent to 99.90 per cent tin.
One explanation for the much more significant decline in shipments could be re-stocking by smelters after record shipments of 11,111 tonnes in June 2013. However, what remains unclear in the July numbers is the extent to which they were affected by reduced shipments from non-complying smelters.
The London Metal Exchange (LME) tin price showed little reaction to the Indonesian export announcement, suggesting that the 13 per cent rise in tin prices from US$19,300 per tonne in mid-July to US$21,854 per tonne today had anticipated the Indonesian export news. If the July numbers prove to be a precursor for a sustained reduction in exports from Indonesia, lower LME tin stocks and a higher LME tin price should be expected.
The latest six-monthly survey of analysts’ London Metals Exchange (LME) price forecasts, as reported by theInternational Tin Research Institute on July 29 indicated an expected rise in the average tin price next year, with the consensus view of 17 analysts seeing the annual price rising to $23,000 per tonne next year, up from $22,000 in 2013.
All of the six companies providing forecast global supply/demand balances for tin expected the market to be in deficit in both years, with an average expected supply shortfall of some 5,000 tonnes in 2013 and 2 – 3,000 tonnes in 2014.
As reported by Reuters, an Indonesian overhaul of tin trading rules which raises minimum purity levels is expected to greatly reduce shipments from the world’s top refined tin exporter for a few months, which will potentially push up tin prices.
Last week, Stellar announcing that drilling at the Heemskirk Project has extended tin mineralisation at the Montana deposit by a further 120 metres down plunge. Drilling also confirmed the continuity of tin mineralisation between historical drill holes and current holes and increases prospectivity of the zone between Montana and Severn.
These results support the potential extension of a seven-year mine life identified in the recently completed Pre-Feasibility Study.
Sources: ITRI, Reuters