Tension in Tin

To most people, tin is usually something about to be thrown away; but to the men who know it best, tin is romantic, capricious, volatile--and a very profitable commodity. During the Korean war, speculators from London to Singapore made a killing when tin prices soared to $2 a lb.; then short sellers grew rich as Russian dumping knocked the price down to 75-c-. Gradually the world price inched back to $1.20, which is just about what it costs the industry's many marginal operators to produce tin. But recently the price sank to a low of $1.03, and for this the producers--in Malaya, Indonesia, Thailand, Bolivia, Nigeria and the Congo--blame the U.S. Reason: the U.S. announcement last fall that it would sell off 50,000 long tons of tin from its overloaded strategic stockpile of 341,000 tons. Those 50,000 tons are almost one-third as much as the free world produces in a year.

The market has quivered, waiting for the U.S. to say when and how it would sell so large an amount of tin, and for what price. Despite State Department denials, rumors persist in London (where world price patterns are set) that the U.S. intends to dump its stocks at rock-bottom prices to help out the U.S. steelmakers, who are the prime users of tin (for cans). Equally persistent are contrary rumors that the U.S. will set a high price because it paid relatively high prices for the stockpiled tin and does not want to lose money. The U.S. has another good reason to keep prices up: tin-producing nations (except Malaya) are among the biggest recipients of foreign aid, and a drop in their incomes would inspire demands for more aid.

To prevent wild swings in the prices, the six major producing nations are joined with 14 consuming countries in the International Tin Council. The I.T.C. was able to moderate the Russian dumping by enforcing strict output quotas on its members and by putting pressure on Moscow, which is reluctant to insult the politically sensitive producing nations. But the I.T.C. is not a very toothy dragon because the U.S., which accounts for 23% of the world's annual tin consumption of 215,000 tons, refuses to join on the grounds that the I.T.C. smacks too much of an international cartel. Last month Washington rebuffed an I.T.C. attempt to negotiate price controls on sales from the U.S. surplus stockpile. And it took buying by the I.T.C. itself, increasing its reserves by about 600 tons, to stop the price slide at $1.03. The London Economist complained: "The I.T.C. got a better response from Russia in the crisis of 1958."

This week the U.S. promises to make public the details of its tin disposal program. Washington officials contend that the market will be able to absorb the sales from the stockpile because world production has fallen an average of 26,000 tons short of demand in each of the last four years-largely because of political crises in the Congo and Indonesia. The man who will direct the U.S.'s sales, General Services Administration Executive John Croston, has tried to calm fears of U.S. dumping by saying that the sales would be spaced out over five years, with just enough marketed at any one time to fill the gap between free world supply and demand. But the tantalizing question is what price the U.S. would sell at--and those speculators who guess correctly stand to make tidy sums.

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