Top China tin firm halts output despite aid plan

China's top tin producer, Yunnan Tin, has stopped production at its smelting facility due to low prices, despite a plan by the Yunnan provincial government to support smelters by buying metals.

News of the shutdown moved tin prices up briefly but the price retreated later as worries over demand resurged.

Tin for delivery in three months MSN3 on the London Metal Exchange (LME) ticked up to $11,850 a tonne versus $11,500 before the news. It was bid at $11,600 a tonne at 1225 GMT.

The director at Yunnan Tin said the firm might reopen the smelting facility after February if it sold some tin to the provincial government's stock-building plan, which was aimed at convincing smelters not to cut production and to keep jobs.

Yunnan province's plan to build a reserve of 1 million tonnes of base metals will be financed by bank loans secured on smelters' metals stocks, a document posted on the province's website showed.

The plan, announced last week, targets volumes of 150,000 tonnes for copper, 300,000 for aluminium, 150,000 tonnes for lead, 300,000 tonnes for zinc and 100,000 tonnes of tin.

An official at Yunnan's Economic Committee said last week that the metal would include tin ores, ingots and semi-finished products.

However, a director at the economic operation division of Yunnan's Economic Committee handling the plan told Reuters on Tuesday the buying plan had been finalised and it would be for

Analysts said they think the plan may not help smelters very much, due to the surplus in base metal markets.

"This won't make any difference to the problem of oversupply in commodity markets. The metal will sit there in smelters' yards, it won't go into consumption and it won't deter production," a commodities analyst said, requesting anonymity. 

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