Timah sees tin prices up further

Indonesia's embattled PT Timah Tbk , the world's largest integrated tin maker, expects world tin prices to keep rising until next year, but sees no quick fixes for its own woes.

Global tin prices wallowed at historic lows for most of the latter half of 2001 but have bounced back from $3,900 a tonne to $4,400 a tonne amid moves by some major world producers to cut output and better demand from the electronics sector.

"We expect to see the upward trend in prices continuing next year," Timah's President Director Thobrani Alwi told reporters on Tuesday.

"Demand for tin metal from the U.S. and Japan are still weak, but demand from Asia, especially from China, is rising following the growing electronics sector there," he added.

On Monday, the LME three-month tin close indicated $20 higher at $4,495/4,500 a tonne, close to breaching the $4,500 barrier for the first time since July last year.

The Kuala Lumpur Tin Market (KLTM) , Asia's only physical market, hit its highest level for a year on Monday, to close at $4,460 a tonne.

Alwi said China was cutting its tin production by around 50,000 tonnes this year due to the closure of several mines, but the giant country would see a rise in tin consumption as its strong economic growth supports the electronics sector.

Timah, hit by low prices and rampant illegal mining in Indonesia, reported in May that its first quarter net profit had plunged 99 percent year-on-year to around one billion rupiah ($112,500), due to ailing tin prices and a slump in sales.

The state company said the average tin price received by the company during the first quarter was 23 percent lower than the first quarter of 2001.

But despite his forecast of rising prices, Alwi said he could not say whether Timah's profits would increase over the next few months.

"We are still struggling with efforts to lower our costs, and it is difficult because we have to cope with rising prices of fuel and electricity," he said.

In a move aimed at reducing illegal mining -- which has helped dragged down tin prices by flooding supply -- Indonesia implemented an export ban on tin ore and concentrates starting June 1.

But tin exporters in Indonesia's tin heartland of Bangka and Belitung islands said the ban had caused problems for them and they'd urged Timah to buy the stocks that had been building up.

These supplies have also caused concern in the market that smuggling could again push prices lower by flooding the market.

Alwi said Timah would consider buying the stockpiles from the local miners in line with the company's capacity and at "reasonable prices". He did not elaborate. (*)