Chinese Tin Makers Cut Output on Weak Demand, Prices (Update1)
By Li Xiaowei and Xiao Yu
bloomberg.com
Nov. 4 (Bloomberg) -- The top three tin producers in China, the world's largest maker and consumer, are reducing output as consumption weakens and prices slump, executives said.
Yunnan Tin Co., the world's biggest producing company, has had its overseas orders tumble ``significantly'' this quarter as the global economic slowdown curbed demand from builders and electronics manufacturers, Li Xia, a spokeswoman said today. Yunnan Chengfeng Nonferrous Metals Co., China's second largest producer, has idled about half its capacity, an executive said.
Tin, mostly used in soldering and food cans, has rebounded 42 percent from a 22-month low in October as China and Indonesia, the largest producing nations, trimmed output. The price jumped 8.2 percent yesterday after slumping with other industrial metals last month on concern the credit crisis would push the world economy into recession and reduce demand for commodities.
``Falling export demand from Europe and the U.S. is hurting sales,'' Ju Xin, analyst at Beijing Antaike Information Development Co., said today by phone from Beijing. ``Some of them still have to digest stockpiles.''
Yunnan Tin said yesterday it would reduce production by 30 percent this quarter because of falling metal demand and prices. The company can't estimate when production will resume or the impact on earnings, Li said by phone from Yunnan province.
`Cuts Industrywide'
``As far as I know, production cuts are an industrywide phenomenon,'' said Yunnan's Li. ``Demand from builders, electronics producers is weak, both in China and abroad.''
Yunnan Tin, whose third-quarter profit tumbled 32 percent, fell 10 percent to 7.84 yuan, the lowest since January 2007, and closed at 7.86 yuan. Tin on the London Metal Exchange was up 0.3 percent at $14,550 a metric ton at 10:10 a.m. in London.
Last month's plunge in tin prices ``has further exacerbated export economics which were already weakened by a 10 percent tax'' in China, Du Hongwu, Yunnan Chengfeng Nonferrous Metals Co.'s head of domestic sales, said by phone from Gejiu, Yunnan province. ``I don't see China exports of any refined tin in the near future, not even the metal products.''
China's tin exports declined 98 percent to 436 tons in the first nine months of the year, according to customs data.
Liuzhou China Tin Co., the third biggest producer, has cut output by around 10 percent, Li Jianzhi, a sales director, said today by phone from Guangxi province. Refined tin production was reduced by between 100 tons to 200 tons a month and the company has stopped concentrate purchases of about 200 tons a month in metal content, Li said.
Further Falls
``We feel the reductions in demand outpace those in supply, so there's room for tin to fall further,'' Li said. The company doesn't have plans yet for further cuts, he said.
The company will continue with its own concentrate mining, producing about 800 tons a month. It had an annual refined tin capacity of 13,194 tons in 2007, according to Antaike.
``As a state-owned company, we have mouths to feed, so we can't simply send our people home,'' said Li.
Indonesia, the largest tin exporter, may reduce production if the price extends its decline, an Energy and Mineral Resources Ministry official said yesterday.
``Output will be less than 90,000 tons this year,'' Bambang Setiawan, director general of coal and mineral resources, said in an interview. ``If the price keeps tumbling we'll talk with local governments and producers on their output quotas and we'll have to tighten them.''
PT Timah, Indonesia's largest tin mining company, may produce 45,000 tons of refined tin this year, while PT Koba Tin, a unit of Malaysia Smelting Corp., may make ``less than 10,000 tons,'' Setiawan said in Jakarta.
To contact the reporters for this story: Li Xiaowei in Shanghai at xli12@bloomberg.net; Xiao Yu in Beijing at yxiao@bloomberg.net
Last Updated: November 4, 2008 05:23 EST |
