Summary: 1. Barclays Capital favors tin; 2. Shayne Heffernan: PT Timah Tbk, A Strong Buy for PT Rp4,000; 3. Demand recovery and supply squeeze on global tin, Indonesia Timah leads.
Goldman Sachs dan Morgan Stanley telah mempertahankan bullish outlook mereka terhadap crude oil dan base metal (copper) pada 6 Juli lalu on demand recovery ( http://www.bloomberg.com/news/2011-07-07/goldman-morgan-stanley-stay-bullish-on-oil-copper-as-economy-to-recover.html). Sementara Barclays Capital secara eksplisit pada tanggal 8 Juli memberikan peringkat komoditas bulanan tertinggi kepada copper, tin dan crude oil. *Barclays Capital favors tin*: Sebagaimana diberitakan oleh Kitco News: For commodities generally, the bank sees a more positive global economic environment in the third quarter. “This environment should be especially beneficial for base metals, which are poised to gain from a pick-up in the global auto sector as Japan recovers and will benefit more than other commodities as China approaches the end of its rate hiking cycle, reflecting the fact that China is more important for base-metals consumption than for any other commodity sector,” Barclays says. “Base metals also face significant supply challenges, especially in copper where mine production recently has been far worse than expected.” Barclays ranks the commodities it follows on a scale of one (worst) to five (best). Tin and copper each got a 5 ranking. The scores for other base are: aluminum and lead, 4; nickel, 3; and zinc, 1. For precious metals, gold got a 4, while silver, platinum and palladium each ranked 3. ( http://www.kitco.com/reports/KitcoNewsMarketNuggets20110708.html) *Shayne Heffernan: PT Timah Tbk, A Strong Buy for PT Rp4,000*: Shayne Heffernan oversees the management of funds for institutions and high net worth individuals. On July 6, Shayne Heffernan of Eberling Heffernan upgraded PT Timah, Tbk. to a strong buy with a 2012 price target of 4,000 Rupiah. The Company is primarily engaged in integrated tin mining operations, including the exploration, mining, smelting and marketing of its products to customers overseas. It is also engaged in coal mining and asphalt exploration. The Company acts as a holding company, which supports the business activities of its subsidiaries. As of December 31, 2009, it had seven subsidiaries: PT Tambang Timah; PT Timah Industri; PT Timah Eksplomin; PT Timah Investasi Mineral; PT Dok & Perkapalan Air Kantung; Indometal London Limited, and PT Tanjung Alam Jaya. ( http://www.livetradingnews.com/pt-timah-tbk-a-strong-buy-46577.htm) We agreed with Shayne view on TINS and the year of 2011 may mark an historic advancement of TINS stock to possibly break out its all-time high of Rp3,890 (adjusted price) in 2008. Demand recovery and supply-side constraint play as the background of the positive catalysts. We will provide our technical insight supporting this TINS momentum of solid downtrend price breakout hike tomorrow. *Demand recovery and supply squeeze on global tin, Indonesia Timah leads*: The tin production story is out there is in plain sight, but only those directly involved in supplying the tin ore, refining it, consuming tin metal or trading commodities are paying any attention. *Bloomberg's* Bear Market in Tin Ending as Shortages Mean PT Timah’s Profit Advances 55%<http://www.bloomberg.com/news/2011-07-04/bear-market-in-tin-ending-as-shortages-mean-pt-timah-s-profit-advances-55-.html>explains what's going on now, and what's been going on for years now— Erfandi’s fleet of bamboo rafts are dredging 33 percent less tin ore from the rivers of Indonesia's Bangka Island than in 2008, *as miners fail to keep pace with consumption that jumped 14 percent in two years*. The vessels operating in the world’s largest exporting nation are hauling up no more than 40 kilograms (88 pounds) of ore daily, from 60 kilograms, *as reserves get depleted*, said the 46-year-old foreman. Miners from China to Peru are also struggling to meet demand for the metal, used to solder components in almost all electronic equipment... *The market will be in deficit for the fourth time in five years*, Barclays Capital says... Prices climbed 51 percent to *$26,185/ton* in the past 12 months on the London Metal Exchange <http://www.lme.com/tin.asp> [price chart 2000-present, above] *The market is “critically dependent” on exports from Indonesia, Peru and Bolivia*, said Edward Meir, a senior analyst at MF Global Holdings Ltd. in Darien, Connecticut. Output from the two South American nations may drop to a combined 48,000 tons this year from 51,100 in 2010, CRU estimates. Indonesian supply may increase “slightly,” ITRI<http://www.itri.co.uk/bfora/systems/xmlviewer/default.asp?arg=DS_ITRI_TECHART_25/_firsttitle.xsl/21>forecasts. *The average metal content of ore is declining* because richer deposits are now exhausted, Mohd. Ajib Anuar, group chief executive officer of Malaysia Smelting Corp., the country’s biggest producer, said in an interview in January. Mining companies are removing twice as much waste as they did two decades ago to get to the ore, he said. Lest you think this is a temporary dislocation in the tin market, let there be little doubt that tin is supply-constrained and has been for some time. Stuart Burns wrote Tin — Driven By Fundamentals<http://agmetalminer.com/2010/08/04/tin-driven-by-fundamentals/>in August, 2010. Peak Tin *Tin has supply constraints* and yet along with all base metals demand has come back relatively strongly last year and this. Consequently, exchange inventories have dropped and the price has risen. Tin has the best fundamental prospects of all the base metals and will be the first to reach a new all-time price high, Stephen Briggs, metals strategist at BNP Paribas is quoted as saying in a Financial Times<http://www.ft.com/cms/s/0/8476befe-9e59-11df-a5a4-00144feab49a.html>article. Briggs went on to say, “*World tin mine production peaked as long ago as 2005*. A further decline in Indonesia<http://www.ft.com/cms/s/0/6b6faca2-9636-11df-96a2-00144feab49a.html>, serious supply constraints elsewhere and only small sources of new supply suggest that mine output will at best be flat in 2010. It may grow by just 4% in 2011, with little further progress in 2012”. *Indonesia’s problems do not appear to be getting any better* in spite of significant investment in the development of offshore placer deposits, production is not markedly up. More recently, Michael Montgomery, writing for *Tin Investing News*, explained what's going on in Tin Prices At Historic Highs on Supply Deficit<http://tininvestingnews.com/852-tin-prices-at-historic-highs-on-supply-deficit.html> . Currently, the price is well above the pre-crash highs of 2008. The driving force behind the rise in value is simply the *tight supply of the metal*, and the increasing *use of tin as a substitute for lead in solder for electronic equipment*... Supply side tightness and a lack of new production will continue to be the drivers of the tin market in 2011. *These issues will not be resolved in the short term, and may continue for quite some time*. *Indonesia has stated that it plans to cap tin production at 100,000 tonnes*, leaving only 10,000 tonnes to grow from the predicted 90,000 output this year. With China capping production as well, supply deficits may continue over the next few years. Indonesia would not cap production unless they were planning to conserve their depleting reserves to milk them for all they're worth over the long run. What about the demand side? *Bloomberg* tells the story— Solder represents 52 percent of demand and tinplate 17 percent, according to ITRI Ltd., a St. Albans, England-based researcher. *The metal is used in electronic goods and a high proportion of electrical appliances*, ITRI said. Tinplate prices rose as much as 15 percent to 20 percent in some countries in the past year, according to H.J. Heinz Co., which sells 1.5 million cans of baked beans every day in the U.K. alone. Each 415-gram (0.9 pound) container uses a third of a gram of tin, the Pittsburgh-based company said in an e-mail. *Global sales of electronic equipment rose 17 percent to $1.85 trillion in 2010 and may gain another 6 percent this year*, according to Bannockburn, Illinois-based IPC, an association for suppliers to the industry. *“As long as there’s a circuit board, there will be tin,”* said Wu Xiaofeng, an analyst at Shanghai Metals Market, which has more than 400 researchers. The only thing that will dampen soaring tin prices is a slowdown in demand, but the electronic equipment market is booming. *As long as there's a circuit board, there will be tin*. *Demand for electronic goods is accelerating*. Global sales of *mobile-phone handsets* will rise about 12 percent to about 1.8 billion units this year, Gartner Inc., a Stamford, Connecticut- based researcher, said in a May report. Shipments of *tablet computers* will advance 12-fold from 2010 to 2015, IHS iSuppli, an El Segundo, California-based researcher, said in February. *Chinese requirements may rise 6.8 percent to 157,000 tons this year, compared with domestic supply of 155,000 tons*, according to Ran Jun, a senior analyst at Antaike Information Development Co., a state-backed research group. With demand accelerating, production shortfalls are being met by stock withdrawals. Obviously that can not go on forever. Eventually, something's gotta give. Let's finish up by talking about The Bronze Age<http://en.wikipedia.org/wiki/Bronze_Age>. What is bronze? Near East 3300-1200 BCE Europe 3200-600 BCE BCE stands for "before the common era" The *Bronze Age* is the 2nd principal period of the three-age-system as proposed in modern times by Christian Jürgensen Thomsen<http://en.wikipedia.org/wiki/Christian_J%C3%BCrgensen_Thomsen>for classifying and studying ancient societies. *A region could be in the Bronze Age either by smelting its own copper and alloying with tin <http://en.wikipedia.org/wiki/Tin> or by trading for bronze from production areas elsewhere*. [Bronze Age axes left<http://www.dot-domesday.me.uk/bronze.htm> ] *Copper/tin ores are rare, as reflected in the fact that there were no tin bronzes in western Asia before the third millenium BCE*. Worldwide, the Bronze Age generally followed the Neolithic, but in some parts of the world, a Copper Age served as a transition from the Neolithic to the Bronze Age. Although the Iron Age generally followed the Bronze age, in some areas such as sub-Saharan Africa, the Iron Age intruded directly on the Neolithic from outside the region. *Bloomberg* alludes to the *Bronze Age* at one point. Tin is more than *31 times rarer than copper* in the earth’s crust and the two metals were combined to make bronze as long as *5,500 years ago*, according to the U.S. Geological Survey<http://minerals.usgs.gov/minerals/pubs/commodity/tin/>. This year, global demand may rise 0.5 percent to an all-time high of 366,000 tons, exceeding supply by 6,000 tons, Barclay's Capital estimates. Based on last year’s average price, that would value consumption at almost $7.5 billion. Although we can not trace the vagaries of tin ore mining and refining over 5,500 years, we can assert with increasing confidence that the world will never produce more tin than it is producing right now. And thus an expansionary phase that started in the *Bronze Age* is coming to an end. Our depleting tin ore reserves are a classic example of limits to growth. This might be a good time to start paying attention. Last year was also a good time to pay attention. As was the year before that... '+'
