Quotes from Commerzbank Corporates & Markets:
-Unlike the oil prices, metal prices were unable to resist the downward pull of the precious metals and likewise fell significantly yesterday: the LME base metal index declined by 1.5%. From today, the markets in China will remain closed for the New Year festival up to and including next Tuesday, which should be reflected in lower liquidity on the metals markets. Most production facilities will also be idle during this period.
-The tin price once again dipped temporarily below the $18,000 per ton mark yesterday despite the fact that 19 tin smelters in Indonesia with an annual production capacity of around 30,000 tons agreed to curb exports. According to the Indonesian Association of Tin Exporters, exports are to be limited to 2,000 tons per month, initially for a period of three months.
-The quota will be reviewed each month on the basis of demand. This step is intended to help drive up tin prices - the Association is aiming to achieve a price of $19,500 per ton. This means, however, that the export moratorium that had previously been discussed will not be imposed - mainly because of resistance from PT Timah, the largest Indonesian tin producer.
-The day before yesterday, PT Timah had surprisingly announced itself that it was not planning to sell any more tin for the time being on account of the low prices, though it will meet its long-term contractual obligations. We are sceptical about whether this will serve to drive up tin prices in the short term.
