Indonesia tin smelters must plug export leaks-analysts

* Indonesia tin smelters blame contracts for monthly rise
* Sceptical market players would believe output stoppages
* All eyes on November export data

By Michael Taylor
JAKARTA, Nov 15 (Reuters) - Indonesia's monthly tin
exports increased in October to meet contractual sales agreed
before smelters imposed a shipment ban,
but analysts say production shutdowns and stricter enforcement
to plug the leaks will be needed to achieve higher prices.
Data last week surprised tin investors, showing Indonesia's
refined tin exports rose 4 percent last month to 5,441.58
tonnes, versus September's 5,233.06 tonnes, though shipments
fell 38 percent versus a year ago.
This came despite the decision earlier this month by a group
of more than 20 smelters in Indonesia's top tin-producing region
of Bangka island to extend a self-imposed ingot shipping
stoppage until the end of December.
Indonesian smelters began a tin ingot export ban on Oct. 1
in an effort to boost prices, which they would like to see above
$23,000 a tonne.
"Because Timah is a government company, so we allowed them
to fulfill their contract to buyers," Johan Murod, secretary at
the Indonesia Tin Association said in a text message to Reuters,
when asked about the month-on-month tin export rise.
PT Timah, the world's top integrated miner, has
said it will continue to make tin ingot shipments in contracts
agreed before an industry group halted all Indonesian exports
from October.
"Other producers are not allowed to export," said Murod, who
is also a director of Bangka-Belitung Timah Sejahtera, which
groups five private tin smelters on Bangka.
Analysts were not convinced.
"It's fair to say that the number was higher than one might
have expected," said BNP Paribas analyst Stephen Briggs. "The
number is still quite high, which does suggest that there have
been some leakage.
"They (smelters) need to make sure they plug the leaks --
it's as simple as that," he said, adding that the cost of
continuing producing while not generating cash through sales,
was tempting some smelters to breach the export stoppage.
There are 39 tin smelters approved by the Indonesian trade
ministry to export refined tin. Exports totaled 92,487 tonnes
last year and 99,287 tonnes in 2009, trade ministry data showed.
"What would persuade the market more would be producers
actually closing down, and we haven't had much news on that
front," said Briggs.
November's export numbers will likely give a better
reflection on the effectiveness of the shipping stoppage in
Southeast Asia's biggest economy.
"If November (export data) isn't significantly lower, there
is going to be enormous scepticism here."

PRICES STILL LAG TARGET
Tin, mainly used in soldering for electronics, traded at
$21,400 a tonne on the London Metal Exchange at 0456 GMT. The
metal, which hit a record above $33,000 a tonne in April, has
gained around 15 percent since lows on Sept. 26, when the
stoppage decision was made.
Since the October ban came into affect, benchmark prices
have gained 5.2 percent and are down almost 3 percent in
November.
"It's done better than other base metals, generally
speaking, but it's nowhere near the $25,000 a tonne that
Indonesian producers are hoping for," said Briggs.
Tin inventories in LME warehouses, are currently at 14,550
tonnes, having dipped from above 20,000 tonnes at the end of
September. <0#LME-STOCKS>
Analysts say the price impact of the latest tin export
stoppage could increase in December, when London stocks level
are seen falling to a thin level of 10,000 tonnes.

Indonesia, the world's No.2 tin producer after China, has a
track record of supply issues that impact prices.

Trade officials said last month they were looking to revise
royalty payments made on all domestic tin shipments, to close a
tax loophole.
These events come against the backdrop of falling onshore
reserves in Bangka, located off Sumatra's east coast and the
world's largest tin-producing area.

Indonesia refined tin output for 2011 (trade ministry data)

month exports monthly change year-on-year change
(tonnes) (percentage) (percentage)
October 5,441.58 4 -38
September 5,233.06 -38.9 -24
August 8,559.61 -7.6 7.3
July 9,265.72 -14.8 4.5
June 10,875.25 55.1 35.4
May 7,013.28 -27.8 -4
April 9,708.45 7.3 22
March 9,051.46 46.4 37.6
February 6,181.42 -15.7 -11.6
January 7,334.65 -5 8.3

(Editing by Ramthan Hussain)