Is Indonesia facing a deflation problem in 2016?

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The positive price forecast for tin depends heavily on Indonesian export regulations

How the tin price will develop in the next few months depends primarily on Indonesian exports. Indonesia is the world's largest exporter of tin. The export regulations there have been tightened again since the beginning of August. With the new regulations, the Indonesian government wants to ensure that license fees and export taxes are properly paid. In addition, she is taking action against smuggling and environmental damage. In the months before, large volumes of tin had apparently been sold, so that exports remained at a high level in absolute terms up to and including July.

The Indonesian Tin Exporters Association expects the stricter export conditions to temporarily delay exports. However, exports should return to normal levels within three months. Should the supply actually become noticeably scarce in the next few months, the price of tin should recover significantly. In this case, the Commerzbank end-of-year forecast of $ 17,500 per ton is still achievable. At the end of the first quarter of 2016, the price will be $ 20,000 per ton. These predictions are 11.8 percent and 27.8 percent above current prices.

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Image source: Alcoa Inc., Yusuf Ahmad / Reuters, Istockphoto

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