New LME tin contract to start in June

LME Chief Executive Michael Brown said a decision to resume tin trading after more than three years was made by the exchange after a study of the world tin market.

Trading of tin on the LME was halted in 1985 by the British government following a period when supply of the metal far exceeded demand but prices for tin remained relatively high.

The International Tin Council (ITC), a cartel-type organization in business since 1956 and composed of tin-producing and tin-consuming nations, ran into trouble trying to support tin prices in the early 1980s when non-members started to become strong players in the tin market increasing supply. Over-pr oduction of the metal finally caught up with the ITC and, with prices in decline, the tin market collapsed.

With no open market available to them since 1985, European tin traders have reportedly been doing business by telephone.

The New York dealer price for tin — a weekly average — recently quoted by U.S. publication Metals Week has approached $4.40(US) per lb, up more than $1 from a year ago. Quoted in dollars

The new tin contract will differ from its predecessor; it will be quoted in dollars instead of pounds, and only high grade tin will be traded (both high grade and standard were traded previously).

The LME has had to defend itself in numerous legal actions since the tin contract was dropped.

London-base publication Metal Bulletin recently listed a number of factors favoring a return to tin trading: market volatility, sufficient inter-merchant business, higher prices and “enough market to make it work.”

North America’s only producing tin mine is the East Kemptville project in Nova Scotia operated by Rio Algom. The mine was initially brought into production in late 1985 and run by Rio until late 1986 when financial hardships forced the company to forfeit the mine to a banking group. Rio re-acquired the mine in early 1988 and currently operates it under the name Rio Kemptville Tin Corp.

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