UPDATE 1-Indonesia tin smelters halt output, exports halved

(Updates throughout)

* Only one or two smelters operating - tin association

* Exports fall to 4,000 T/month - mine executive

* Timah says may resume spot sales

By Fergus Jensen

JAKARTA, Aug 24 (Reuters) - A stoppage by Indonesian tin miners because of weak global prices has increased to encompass over 90 percent of smelters, leading shipments to decline by more than half from the world's top exporter of the metal, tin executives said on Friday.

All but one or two of the 28 licensed smelters in the main tin producing region of Bangka-Belitung have now stopped operating, said the Indonesian Tin Association, an increase from around six being shut earlier this month.

This means the islands are now only shipping up to 4,000 tonnes of tin ingots a month, down from 7,000 tonnes usually, said Johan Murod, CEO of Babel Tin Group.

Top integrated miner PT Timah is still running, but the stoppage by most others is likely to further thin global tin stocks as miners seek to bolster prices.

"Tin prices are still not at a profitable level for production, so smelters are still waiting for a good price," the tin association's president Hidayat Arsani told Reuters, adding prices would need to reach $23,000 to cover production costs.

The Indonesian Tin Association last year initiated an export stoppage in an effort to boost prices, though some members started shipping again, leading to disputes within the group and market scepticism over its credibility.

State-owned Timah earlier this month stopped spot tin sales, but has not ruled out the possibility of resuming them at prices below $21,000 a tonne, Agung Nugroho, the firm's corporate secretary, said on Friday.

London tin prices have rallied 13 percent over the past 10 days, to more than $20,000 a tonne on Friday from lows of around $17,700 in mid-August, outperforming lead and other base metals, on short covering and supply worries, traders said.

DIGGING DEEPER

Indonesia is the world's top supplier of a metal used as an ingredient for electronic goods, but Bangka-Belitung's onshore mines have been depleted, leading to a need for more expensive deep or offshore mines.

The country's total 2011 exports of tin, mainly used in soldering for electronics, rose almost 4 percent to 96,019.76 tonnes and currently stand at 55,613.52 tonnes for this year.

"With prices at current levels the community can't be bothered with mining," said Eko Wijaya Parsito, who owns several mining and smelting businesses that he said have stopped.

"They are digging deeper and deeper, so if tin prices are low, it can't be mined."

Analysts say tighter supplies from the reduced mining have already helped support prices, but the lack of a united strategy among Indonesian miners means the stoppage is unlikely to drive prices back up to $23,000 a tonne.

Barclays metals analyst Gayle Berry said the recent gains were a result of several factors including Chinese import data and high levels of cancelled LME warehouse warrants.

"Together it all makes quite a supportive fundamental backdrop for tin prices," Berry said. "We haven't seen a consolidated action and that's what you would need for it to be really supportive." (Editing by Neil Chatterjee and James Jukwey)