Tin price continues to rise steeply

Press, 6 February 1982, Page 17

Tin price continues to rise steeply

PA London The price of tin advanced to a further record in London yesterday because of a shortage of supplies, but the Malaysian Government said that the earnings of many of the country’s mining companies were still inadequate. The price of tin for immediate delivery, sought by traders obligated to supply metal to a mystery buyer later this month under forward contracts, touched £ 8970 ($NZ21,045) a tonne on the London Metal Exchange (LME). This was £llO ($258) more than the previous peak on Wednesday. Dealers said that quantities traded today were light, reflecting the mystery buyer's grip over available supplies. Dealings by the buyer, believed by many traders to have connections with

Malaysia, the world’s largest producer, have dominated the market since July and forced up tin prices at a time when most other commodity prices have been flat. The purchasing operation, concentrated first on buying forward contracts for delivery at a future date followed by a switch to spot deals, has left the buyer largely in control of the market.

Under contracts agreed in November, the mystery buyer is due to take deliveries at the end of this month and some dealers fear that those who sold metal they did not already own face severe financial problems in the current scramble for supplies.

The scramble meant that spot tin was £940 ($2205) higher yesterday than metal for delivery in three months. The LME has decided to

limit the penalty to be paid by so-called short sellers for deferring their commitments to the buyer for a few days until tin is more readily available and possibly cheaper. Dealers said that the LME, after several days of investigations into recent “abnormalities” which had distorted prices in London, had decided to limit the premium a dealer must pay the buyer for deferring delivery. The market was especially concerned about February 25 and 26 when the buyer, who already holds most supplies of tin actually available, is due to take delivery of large quantities purchased under forward contracts. The LME did not mention the new financial limits in a statement issued yesterday after a meeting of its board and committee, which polices the market.