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Indonesia, the world's largest tin exporter, wants to displace the London Metal Exchange as the venue for setting the global price benchmark by requiring the metal be traded on a domestic exchange before export.
"The purpose of trading physical tin through the bourse for export is to make Indonesia the place for international tin-price discovery, not to refer to the LME anymore," said Sutriono Edi, the head of the Commodity Futures Trading Regulatory Agency.
The government was studying other commodities to which the local-trade policy might be applied, Edi said, listing coffee, cocoa, rubber and coal.
Tin, used in smartphones and packaging, rose to a six-month high in London last month after the rule took effect and smelters curbed exports, with only one exchange in Jakarta authorised to trade the ingots.
The policy changes and lower shipments may create a bottleneck for the global market, spurring higher prices, according to Commerzbank.
A decision allowing a second exchange to trade tin might come soon, Edi said.
"As sales start to recede, local producers will exert even more pressure on the government to relax the rules, in which case we could see a rather sharp correction setting in by November," INTL FCStone analysts including Edward Meir said in a report.
Consumers were reluctant to use exchanges in Jakarta to buy tin, Meir said, predicting that prices might climb to as much as US$25,000 a tonne, before dropping.
Miriam Heywood, a spokeswoman for the LME, declined to comment on Indonesia's plans.
Tin for delivery in three months outperformed the five other main base metals including copper on the LME in the past year as the Indonesian curbs worsened a global deficit. The metal rose to US$23,500 on Monday, the highest since March 19, in Jakarta yesterday.
The rule change represents a challenge to the LME, the oldest and largest base-metals marketplace.
Indonesia, which accounts for 40 per cent of global tin shipments, started trade under the new rule from August 30.
"The solution is to have physical tin trading through the bourse, so that the tin export price can be increased and Indonesia can be the world's tin-price reference," Edi said.
Higher prices showed the policy was working, he said.
At present, only the Indonesia Commodity and Derivatives Exchange is allowed to trade tin ingots before export from Southeast Asia's largest economy.
The regulatory agency Coftra had studied a proposal from the Jakarta Futures Exchange to also trade the metal, Edi said.
The new policy was designed to establish a domestically determined benchmark price, Trade Minister Gita Wirjawan said. It would be implemented over the long term and shipments were expected to decline.
While the rule applies to refined tin ingots at present, it will be extended to cover other products such as solder from 2015.


Jakarta eyes global tin price role

Jakarta eyes global tin price role.

Business

Commodities

World's biggest exporter of the metal wants to replace LME as venue for setting benchmark


Indonesia, the world's largest tin exporter, wants to displace the London Metal Exchange as the venue for setting the global price benchmark by requiring the metal be traded on a domestic exchange before export.


Jakarta eyes global tin price role

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}World's biggest exporter of the metal wants to replace LME as venue for setting benchmark

World's biggest exporter of the metal wants to replace LME as venue for setting benchmark