Lecture 12 - Metal Markets and Market Catastrophes

Question 1

Tin Info

Answer 1

• Soft, pliable, silver white
• Uses: solder, alloys, tin cans
• Main use in solder and tinplate and chemicals

Question 2

Main tin producers

Answer 2

China, Indonesia, Peru

Question 3

Tin price changes

Answer 3

Production costs increased
Overall price stayed the same

Question 4

Tin placer deposits

Answer 4

Natural concentration of heavy minerals, deposited by gravity

Question 5

Reasons for the London metal exchange

Answer 5

• If no market then industrial consumers would have to find individual suppliers and negotiate a price, this is difficult.
• Industry can place orders for the future and avoid dependence on a single supplier.

Question 6

Involvement of cartels and International Tin Council

Answer 6

countries get together to prevent international Tin-glut and lowering of prices.
1931 - Malaysia, Dutch E indies, and Bolivia sign agreeement.
More producers joined over time

Question 7

1956 New Tin Agreement

Answer 7

Established to deal with surplus Tin production
Could impose export controls and buffer stock
Consumers concerned with strategic use of Tin.

Question 8

Role of cartels

Answer 8

Brazil and peru non ITC members
Smugglers in Thailand up to 18,000t pa.
Neither US nor Bolivia joined the 6th International Tin Agreement

Question 9

Collapse of world Tin market 1985

Answer 9

Price halved
ITC had a buffer stock - by buying stock
Funds to buy stock were not coming from ITC members the BSM had to fund purchases by borrowing from financial institution. Tin stockpile was used as collateral.
US dollar decline meant sterling value of the stockpile collapsed

Question 10

Fallout of collapse

Answer 10

Bolivian miners lost jobs
Cornwall mines shut down