FINANCIAL MARKETS : London Metal Exchange Will Resume Tin Trading
The London Metal Exchange said Wednesday that it will resume tin trading June 1, about 44 months after a commercial crisis halted official dealings in the metal.
The exchange’s board decided to resume trading, suspended since October, 1985, after addressing the current needs of the world tin market, said LME Chief Executive Michael Brown.
The board believed that members of the International Tin Council should “right the wrong” that resulted in the 1985 suspension of the tin contract, Brown said.
Resumption of daily trading will provide producers, dealers and consumers with an open market for tin, now regaining popularity. Since the suspension of LME trading, European tin trading has been conducted by telephone.
The new contract has two major changes from its 1985 ancestor: It is in dollars, not pounds, and only high-grade tin, rather than high-grade and standard, is traded. The warehouses where tin can be delivered remain the same.
The tin council, which tried to stabilize world prices by buying low and selling high and using a buffer stock of the metal, ran out of funds and caused a price crash that forced the LME to halt trading. Futures contracts set the price and delivery conditions on a given commodity in advance.
A British court ruled in March that the exchange acted properly after the price collapse, traders said.
The crisis has caused a massive legal wrangle. Tin prices plunged from more than $17,000 (10,000 pounds) a ton in June, 1985, to a 10-year low of $5,780 (3,400 pounds) in March, 1986.
The LME board Wednesday urged tin council nations and creditor delegates to reach a “satisfactory and equitable conclusion” over money. An informal panel meeting is under way in London this week to discuss an out-of-court settlement of the lawsuits after the 1985 collapse.
Recently, a more optimistic outlook exists for tin and its Third World producer nations.
Tin-coated steel has gained ground against aluminum in the beer and soft drinks canning industries, while tin consumption in non-socialist countries has risen from about 150,000 tons in 1985 to an estimated 165,000 tons last year. Output has dipped to about 155,000 tons, analysts said.
Together with stricter export controls by leading producers, tin prices have reached three-year highs. Spot tin was up at $10,150 a ton on the free market Wednesday, a peak since March, 1986.
