Tin price soars to 14-year high as demand soars

PT Timah Tbk, Peru's Minsur SA and Malaysia Smelting Corp, which together produce almost half the world's tin, say they can't boost output to meet demand from companies such as Dell Inc and H J Heinz Co as prices soar to 14-year highs, Bloomberg reported.

Tin prices have almost doubled this year on the London Metal Exchange, peaking this month at US$9,100 a metric ton.

Tin producers failed to invest in new mines during a four-year slump, leading to a deficit in the US$2.6 billion market that CRU International and other analysts say may last two years.

'We are unable to raise our production above usual levels,' Prasetyo Saksono, corporate secretary at state-owned Timah, the world's largest tin producer, said.

Dell, the world's No 1 computer maker, and exporters of televisions and other electronics are using more tin-based solder to comply with a European Union ban on the use of lead that starts in 2006.

The higher demand, coupled with soaring steel prices, has helped raise costs of tinplate used to make cans.

'The price of tinplate has increased by as much as 25 per cent in some countries,' said Michael Mullen, a spokesman for Pittsburgh-based Heinz, the world's biggest ketchup maker.

CRU forecasts that tin production this year will fall 20,000 tons short of demand of 314,000 tons.

Tin sold for about US$8,300 a ton as of Thursday. Prices averaged US$4,750 a ton between the end of 1999 and the start of this year. They fell as low as US$3,630 in August 2001, when LME inventories peaked at 39,475 tons as production from Indonesia and China led to a glut of the metal.(*)