Last updated: July 23, 2010 10:29 pm

Tin surges on Indonesia supply concerns

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The cost of tin, the metal used for soldering in electronics, surged nearly 9.5 per cent on the week as traders warned of higher consumption than supply.

On the London Metal Exchange, tin for delivery in three months rose on Friday to an intraday peak of $19,750 a tonne, the highest in nearly two years.

Analysts at Barclays Capital warned recently “tin continues to provide one of the most robust fundamental pictures across the base metals complex, in 2010 and in 2011” due to a “clear global market deficit”.

The shortage is due to falling production in Indonesia, the world’s largest producer, and robust consumption in Japan and, to a lesser extent, in Europe as manufacturing and electronic sectors increase output after the crisis.

Analysts and traders believe tin prices will rise above the key $20,000 a tonne level as soon as next week, but they added it is unlikely the metal would surge to its record high of more than $25,000 a tonne set in mid-2008.

“The current level of tin prices will come to be seen as a ‘bargain’, given that fundamental conditions are set to tighten, in our view, over the next 18 months,” Barclays Capital said.

Other metals climbed, with copper above $7,000 a tonne. Iron ore prices rose 7.7 per cent on the week.

Elsewhere in commodities markets, oil and gas prices rose this week on a storm threat to the US Gulf of Mexico’s energy infrastructure.

Nymex September West Texas Intermediate lost 32 cents on Friday at $78.98 a barrel. ICE September Brent retreated 37 cents to $77.45.

Oil trading has been sluggish as prices remain in a $70-$80 range, with daily WTI volume less than half the 1m contracts that changed hands on heavy days earlier this year.

“Trading has increasingly become correlated with the equities,” said Andy Lebow of MF Global, a brokerage.

Crude prices also rose as tropical storm Bonnie, the second named storm of the Atlantic hurricane season, made landfall in Florida and threatened the Gulf of Mexico.

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