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RPT-analYSIS-Indonesia tin ban to lift prices if exporters toe line (2011/09/28 10:19AM)

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(Repeat of story published late on Tuesday)
* Near-term price support, but economic factors still
dominate
* Indonesia tin association says $23,000/T is break-even
level
* Doubts cast over smelters'' resolve if prices creep higher

By Michael Taylor
JAKARTA, Sept 27 (Reuters) - Indonesia''s plan to halt tin
exports will offer long-term price support only if smelters
stick to the ban, which is not certain.
Smelters in the main producing region of Indonesia, the
worldtop refined tin exporter, agreed to impose a ban on tin
ingot shipments from Oct. 1 until global prices recover to above
$25,000 a tonne.
The news has supported London prices , which edged up
on Friday and Monday as other base metals sol off in a global
commodities rout.
"It''s sort of an act of desperation," said David Thurtell,
an analyst at Citigroup. "The danger is, if it goes on for too
long, you''ll get some sort of breaking in the ranks.
"It seems to have had animpact but the market will be
sceptical that it will last," he added. "It is a long way off
the record highs, but for the industry to wish that it was going
back to $25,000 is like wishing the sun wouldn''t come up."
Analysts say Indonesian tinsmelters run the risk of
substitution, with solder possibly being made from lead instead.
There are also legal doubts about the move.
State-owned Timah , the world''s largest integrated
tin miner, attended Monday''s meeting and has agreedto suspend
tin ingot shipments. But market players doubt if Timah -- which
is looking at a threshold of $23,000-$24,000 a tonne before
lifting the ban -- will impose the export curb.
"Such a move by Timah is very unlikely as they market their product mostly on a contract basis," said an Indonesia-based
industry expert.
"Reducing sales in the spot market is possible but not
breaching sales contracts."
Commenting on Timah''s price target, Johan Murod, general
secretary of theIndonesian Tin Industry Association, said in a
text message:
"We cannot export at a price of $23,000 because this price
is only a break-even point for small (scale) mining. $25,000 is
a rational price for tin."
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For an Indonesia tin export/price graphic:
http://link.reuters.com/tyr93s
Commodity prices then and now:http://link.reuters.com/vam88r

Global metal stocks: http://link.reuters.com/deg67n
FACTBOX-Indonesia''s tin industry [ID:nSGE6A20D2]
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Tin, mainly used in solders for electronics, struck a record
high above $33,000 atonne in April, driven by a crackdown on
illegal mining, tighter export rules, falling onshore reserves
and rain that had hindered production in Indonesia. But like
other base metals, the price has slumped on fears of a global
recession.
Tin onthe London Metal Exchange jumped 5.5 percent to
$21,450 by 1020 GMT, on Indonesia''s plan to ban exports and on
hopes of more bailout measures for banks in Europe. The price of
the metal rose 2.5 percent combined on Monday and Friday, while
other basemetals fell.
"If they stop shipments for a month, that will put the
squeeze on prices," said Nicholas Trevethan, a senior metals
analyst at ANZ Bank in Singapore. "But I don''t know how
well-disciplined this moratorium will be.
"They arestill producing," he added. "The loss of
Indonesian supply is significant for the market -- but stocks at
21,000 tonnes would be enough to meet lost Indonesian supply for
two months."
Tin stocks in LME warehouses stand at 21,295 tonnes, up from 16,375 tonnes in early January. <0#LME-STOCKS>
Indonesia is expected to produce up to 100,000 tonnes of tin
ore in 2011, versus around 96,000 tonnes last year, according to
industry association ITRI.

CRACKDOWN
Bangka, offSumatra''s east coast, is the world''s top
tin-producing area.
Trade ministry data showed refined tin exports at 92,487
tonnes for full-year 2010, compared with 99,287 tonnes in 2009.
Indonesia exported 67,989.84 tonnes in the first eight months this year, the data showed.
Indonesia, the world''s second-largest producer of the metal
after China, has a track record of supply issues that often
impact prices.
In early August, the association said police carrying out an
environmentalcrackdown in Bangka were hindering domestic
smelters'' supplies. [ID:nL3E7JA0J5]
Indonesian trade officials said last month they were looking
to revise royalty payments made on all domestic tin shipments,
to close a tax loophole. [ID:nL3E7JI2D9]
"You couldn''t get away with this kind of thing in Europe or
North America," said ANZ''s Trevethan, citing anti-trust
legislation.
Analysts see the global tin market in a 15,000-20,000 tonnes
deficit this year, with new mining projects notseen taking off
until at least 2013.
"This isn''t going to create a deficit -- they are still
producing," said Trevethan. "It is going to create an
interesting wobble in the market, but that supply will
eventually come back to the market."
Like many other commodities, base metal investors are
largely ignoring fundamentals to focus on the slowdown in
global economic growth. [MET/L]
"It is going to be a huge support to the market from a
fundamental point of view," Judy Hui Zhu,analyst at Standard
Chartered Bank in Shanghai, said on Indonesia''s export plans.
"But investors in base metals markets and other commodities are
not looking at the fundamentals.
"Concern about the global economic outlook is the dominant
factorfor now," she said.

(Editing by Ramthan Hussain)
((michael.taylor@thomsonreuters.com)(+62 21 3846364)(Reuters
Messaging:
michael.taylor.thomsonreuters.com@thomsonreuters.net))

Keywords: INDONESIA TIN/EXPORTS