Indonesia scores tentative tin win; blueprint for more commodities

Sun Dec 29, 2013 4:00pm EST
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* Tin trade rule seen as template for palm oil, coal, gold

* Powerful Widjaja clan behind ICDX physical tin contract

* Tin laws backed by trade minister with an eye on presidency

By Melanie Burton and Michael Taylor

PANGKALPINANG, Indonesia/SINGAPORE, Dec 30 (Reuters) - I ndonesia's bold attempt to challenge the London Metal Exchange (LME) for supremacy in the global tin market by imposing strict export rules and driving up prices looks to be paying off.

Shipments from the world's biggest tin exporter slumped to below 1,000 tonnes in September from over 6,000 tonnes after Jakarta ruled at the end of August that all tin ingot shipments should trade via a local platform, the Indonesia Commodity and Derivatives Exchange (ICDX), before being exported.

By November, shipments had recovered to August levels, but tin prices have risen more than 8 percent to $23,000 a tonne since the end-August policy move.

"By imposing the new tin trade rules we have set a price target at $25,000-$29,000 a tonne this year," Sutriono Edi, head of Indonesia's Commodity Futures Trading Regulatory Agency, told Reuters. "It's better for us to export less volume but for higher value and better prices, than export a bigger volume but with low value and low prices."

The stricter trading rules, and subsequent drop in exports, spooked suppliers to some of the world's biggest electronics companies, including Apple Inc and Samsung Electronics . Neither company responded to emailed requests for comment. Indonesia controls 40 percent of internationally traded tin and, outside China, supplies up to two-thirds of Asia's electronics industry with a material used in circuit boards that go into smartphones and tablets.   Continued...