London 01/08/2016 - Major private tin smelters in China have been forced to suspend their production of crude tin under environmental inspections by Chinese authorities, sources said on Monday.
“We have suspended crude tin smelting as it’s more polluting [than other smelting and refining processes]. Our factories also have stopped purchasing raw material temporarily,” a private smelter in Yunnan province told FastMarkets.
“The major four privately-owned tin smelters in Yunnan, whose annual output totalled nearly 50,000 tonnes, have all halted,” he added, admitting their environmental facilities are “not as good as” their state-owned counterparts because they are pressured more to reduce costs and maximum profits.
Tin output by private smelters in China is widely believed to account for around 50 percent of the country’s total production, although no official data is available.
“Production of refined tin have not been affected so far, as previously produced crude tin is still enough to cover needs,” the private smelting source noted.
Crude tin usually goes for further refining and is used as material for production of refined tin, according to market participants. “Without crude [tin], then refining will be stopped soon,” the second state-owned smelter in China pointed out.
Concerns arise from the length of crude tin production curbs - if longer than one month when most private smelters use up their stock for refined production, it probably will affect domestic refined supply and further push up prices, according to industry sources in the country.
The most active SHFE September tin contract hit 121,560 yuan per tonne last Thursday following the news of the smelters’ suspensions, but it then fell back and closed at 119,760 yuan per tonne on Monday.
“The sentiment was boosted by the news, but the real impact on refined tin output has yet to be seen - nobody has cut the refined tin production,” the first smelter said.
“But we probably need to upgrade our environmental facilities to continue to produce [crude tin], or the local government may turn a blind eye to our resumption after the environmental authorities go away - it all depends on how serious the inspections will be,” he added.
(Editing by Martin Hayes)