Jakarta eyes global tin price role

Indonesia, the world's largest tin exporter, wants to displace the London Metal Exchange as the venue for setting the global price benchmark by requiring the metal be traded on a domestic exchange before export.

"The purpose of trading physical tin through the bourse for export is to make Indonesia the place for international tin-price discovery, not to refer to the LME anymore," said Sutriono Edi, the head of the Commodity Futures Trading Regulatory Agency.

The government was studying other commodities to which the local-trade policy might be applied, Edi said, listing coffee, cocoa, rubber and coal.

Tin, used in smartphones and packaging, rose to a six-month high in London last month after the rule took effect and smelters curbed exports, with only one exchange in Jakarta authorised to trade the ingots.

The policy changes and lower shipments may create a bottleneck for the global market, spurring higher prices, according to Commerzbank.

A decision allowing a second exchange to trade tin might come soon, Edi said.

"As sales start to recede, local producers will exert even more pressure on the government to relax the rules, in which case we could see a rather sharp correction setting in by November," INTL FCStone analysts including Edward Meir said in a report.