Tin Prices Enjoy Recovery in Asia : Three Years After Crash, Demand Is Exceeding Supply

Tin is shrugging off the effects of a crash nearly three years ago to shine once more in commodity markets, buoyed by strict supply quotas and renewed world demand.

“There is a growing realization that there is a deficit of new tin and the supply overhang is being depleted,” said Kam Cheng Eng, secretary of the States of Malaya Chamber of Mines.

Prices have risen in recent weeks and could breach 44 ringgit ($16.94 U.S.) a pound by October, up to six months ahead of earlier forecasts, traders and producers said.

The Kuala Lumpur tin market closed higher for the seventh straight session Wednesday at 43.25 ringgit ($16.28) a pound, the highest in 30 months.

$23.98 Price Seen

“But it is nothing spectacular. Prices are just returning to normal. The deficit in new supply will raise prices high enough for high-cost marginal producers to return,” Kam said of the latest rises.

Traders said tin was unlikely to fetch the more than the 63.8 ringgit ($23.98) a pound seen before the crash in October, 1985, when the International Tin Council ran out of money to support prices. Banks and creditors, mostly in Europe, were owed an estimated $1.44 billion because of losses as tin prices halved when the council was no longer able to buy the metal at artificially high prices.

The latest increase was largely a result of a supply control scheme launched last year by the Assn. of Tin Producing Countries, traders said.

ATPC members--Malaysia, Indonesia, Thailand, Australia, Nigeria, Zaire and Bolivia--produce most of the world’s tin and have agreed to limit exports in a bid to support prices.

Association executive secretary Redzwan Sumun said in an interview that world tin stocks, once around 80,000 metric tons, had fallen to about 45,000 tons.

Demand by Canners

Traders and the ATPC said it might take two more years to wipe out 25,000 tons of remaining excess stocks.

Redzwan also attributed the recent recovery to higher demand for the metal by canners in the Western hemisphere and Europe who are slowly switching back to tin because of higher aluminium prices.

Better tin-plating technology, an improved steel industry and a pickup in the electronics industry, which uses tin for soldering, have also helped the metal regain its shine.

Redzwan said world tin consumption in 1988 is forecast to remain at last year’s levels of 1(0,000 metric tons. World production hit 157,000 tons in 1987.