DECLINE IN CHINESE COMMUNIST EXPORTS OF TIN HELPS FORCE WORLD PRICE TO RECORD LEVEL

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• Publication Date: January 1, 1964
• Content Type: BRIEF

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SECRET
FOREIGN DISSEM
Current Support Brief
DECLINE IN CHINESE COMMUNIST EXPORTS OF TIN
HELPS FORCE WORLD PRICE TO RECORD LEVEL
CIA/ RR CB 64-7
January 1964
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
NO FOREIGN DISSEM
SECRET
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WARNING
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
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HELPS FORCE WORLD PRI
A drop in Chinese Communist ecoeed production caused the price ofp
tion in the Free World continued
tin on the London (world) market to move above 1, 000 pounds sterling per
long ton in December 1963, the highest level
declined rough1ye50 percent Chi-
nese exports (and presumably production) d
during the 19,60-63 period; as a result, the a USSR net exporter of Communist i t Bloc
as a whole have shifted from the position of
exports will in-
crease a net importer. There is no evidence that Chinese crease significantly for at least the next year or tw 1o, nor anwhiliseany rapid
increase of output in the Free World anticipated.
from the US tin stockpile may keep the price from rising significantly
above the level of 1, 000 pounds sterling.
1. Shift in the Tin Position of the Bloc
During 1963, for the first time in 8 years,
the Sino-Soviet Bloc hinese became a net importer of tin from the Free
as ind cat Substantiainl
1,
exports of tin to the West were more than
Tin Metal with the Free World
Sino-Soviet Bloc: Net Trade o6-T
Thousand Metric Tons
Communist
China
European
Satellites
Net
2
1
Neg1.
1.6
1956
0.4
.
12.0
-0.1
13.7
4
1957
1.
4
18
Negl.
22.
1958
0
.6
4
6
.
13.9
-0.1
17.4
1959
3.
8.5
-0.2
13.0
1960
2
0
-2.4
1961
6.5
.
-o
8
-4.2
o.6
1962
5.6
.
l
.0
-3
-2.1
1963 /
6.0
_5.
.
Annual tonnage computed from data for January through July.
S E C-R-E-T
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XPORTS DECLINE IN CHINESE COMMCE I TO ER CORD LEVEL
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tin-processing facilities .
_
ere
e level of output. Perhaps the f
ina
il
L
e
ac
ities
are
bei g operated at less than
capacity as a result of technological problems in the large mines as well
as the closure since 1960 of many primitive labor-intensive "native"
mines. Taken together, these two factors would have reduced substant1
ally the output of tin in co" t
'
e
by increased purchases of tin by the USSR and the European Satellites.
Chinese sales to the West have ranged from 5, 600 to 6, 500 tons* each
year since 1960, whereas sales by the USSR, which reached a
18, 400 tons in 1958, had declined to negligible amounts by 196 peak of
1961 the USSR has purchased increasin Y Since
with such imports approximating 5 g quantities of tin from the West,
, 00s in 13. Imorts by
European Satellites from the Free World tamoun e9d to aout 3, 000 the
in 1963. ons
The rise and fall in Bloc exports in recent years is traceable
largely to shifts in the Chinese Communist position. China's tin industry,
as a result of extensive Soviet assistance in engineering and equipment,
was modernized and expanded during the 1950's. By 1959, Chinese out-
put of tin metal probably was approximately 30, 000 tons annually, 70 to
80 percent of which was produced in Soviet-built facilities at Ko-chiu,
in southwestern China. China's consumption of tin, however, is small,
ranging from possibly 2, 000 to 3, 000 tons annually. Thus production is
primarily for export. As shown in Table 2,
peak of 27, 000 tons in 1959 Chinese exports rose to a
but since have declined to an estimated total
of 10, 000 to 15, 000 tons in 1963. Shipments to the USSR have risen and
fallen in similar fashion and provided the basis for large Soviet exports
to the Free World in 1957-59. Shipments to the European Satellites have
been maintained, and sales to the Free
World have increased consider-
ably, amounting to roughly US $14 million to
US $16 million of foreign
exchange earnings annually since 1961.
- ~ilu ueclin hinese Communist
During 196
-
2 6 3 exports is unknown.
n rates. Again, it is conceivable that the
Chinese, for some unknown reason, are holding exports to the Free Worl
at a constant level and are buildin up d
unlikely, however g P stocks of tin. The latter seems
in view of the country's need for foreign exchange.
Unless otherwise indicated, tonnages throughout this publication are
given in metric ton,,;.
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Chinese Communist Exports of Tin Metals
1956-63
l
t
T
USSR
European
Satellites
Free World
Year
o
a
1956
16.5
15.7
0.4
0.4
8
1957
24.3
22.0
0.5
1.
0
4
1958
24.7
19.3
1.4
.
6
1959
27.1
20.8
2.7
3.
4
1960
25.1
17.7
2.7
.7
6
1961
20.6
11.2
2.9
.5
1962
15.5 a/
8.8
1.1 a/
5.6
1963
10 to 15 b/
4 C/
N.A.
6.0 d/
a. Data on shipments to Hungary and East Germany are incomplete.
b. Estimated.
c. Annual tonnage computed from data for January through November.
d. Annual tonnage computed from data for January through July.
2. Impact on the Free World Market
The decline in exports of tin by the Bloc has had a significant impact
on the Free World market in recent years. As shown in Table 3, con-
sumption of tin in the Free World has exceeded production each year since
1957, even though output has increased since the late 1950's. Since 1959,
production has been steady at about 145, 000 tons annually, whereas con-
sumption has averaged 162, 000 tons per year. Malaysia, the world's
largest producer of tin (40 percent of the Free World's output of concen-
trates and 57 percent of the tin metal in 1962), has increased its produc-
tion significantly since 1958-59 as have several lesser countries, including
Thailand and Nigeria. Such increases have been offset to a considerable
extent, however, by declining levels of output in a number of other impor-
tant tin-producing nations. Output of concentrates in the nationalized
industry of Indonesia, the third largest producer in the Free World, has
fallen off roughly 20 percent, and output in the strife-torn Republic of
the Congo (Leopoldville) about 22 percent. Bolivian production, the
second largest in the West in 1962, was approximately 8 percent below
that of 1959, largely as a result of increased union interference in the
operation of the government-owned mines.
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Impact of the Decline in Bloc Exports of Tin
1-956-63
Thousand Metric Tons
Avera
e
g
Year
Free World
Production
Free World
Consumption
Bal
Net Imports
London Price
(Pounds
ance
from_thc_hloc
Per-Long Ton)
1956
1
169.7
152.4
17.3
1.6
787.7
957
8
160.9
145.3
15.2
13.7
754.8
195
122.9
138.2
-15.3
22.4
734.9
1959
6
115.8
150.4
-34.6
17.4
785.4
19
0
147.8
164.6
-16.8
13.0
796
6
1961
96
141.2
161.5
-20.3
6.1
.
888.6
1
2
6
145.8
161.6
-15.8
0.6
896.5
19
3 a/
145.0
161.0
-16.0
-2.1
1,029.0 b/
a. Annual tonnage computed from data for January through July.
b. Average price on the London market as of 18 December 1963.
During 1958-60, shortfalls in production of tin in the Free World were
matched to a considerable extent, as shown in Table 3, by Bloc sales in
the West. In this 3-year period the shortfall totaled 67, 000 tons com-
pared with imports from the Bloc of 53, 000 tons. However, withdrawals
from stocks began in 1959 and have continued- Consumer stocks as well
as stocks of most tin brokers have been reduced as have been the non-
commercial stocks of the Italian and Canadian governments, The US
Government since 1962 has been releasing quantities of tin from the
approximately 164, 000 tons of tin designated as being in excess of the
requirements of the national stockpile, 50, 000 tons of which have been
authorized by Congress for disposal over an extended period. In addi-
tion, the International Tin Council (ITC), formed in 1956 by key produc-
ing and consuming nations of the Free World (except the US) to cushion
wide fluctuations in price, had exhausted its buffer stock of tin by the
end of 1963. The continued drain on stocks since 1959 presumably is
responsible for the increase in the average world price from about
800 pounds sterling in 1960 to more than 1, 000 pounds sterling in
December 1963.
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3. Prospects
Prospects for a rapid increase in world production of tin during the
next 2 to 3 years are dim. Production of tin in the USSR is expected to
increase to possibly 26, 000 tons by the mid-1960's (compared with an
estimated total of 23, 500 tons in 1963), but available information indi-
cates that output will continue to lag behind consumption by several
thousand tons annually. Chinese exports of tin probably will not in-
crease significantly in the near future, barring some dramatic change
in the situation such as Western assistance in expanding China's pro-
duction of tin.
For the large and efficient Western companies, the instituting of
adequate long-term investment safeguards on the part of the producing
countries reportedly is indispensable for any new expansion programs
that involve large capital expenditures over an extended period. For
other producers, such as the nationalized industry of Indonesia, a
lack of adequate technical skills as well as a shortage of funds prob-
ably will insure against any significant increases during the next year
or so. In addition, a key task confronting practically all of the tin
industries of the Free World is the increasing need to develop new
reserves sufficient to take care of growing long-term demand.
Sufficient surplus tin is held in the stockpile of the US Government
to cover the world deficit in tin for several years. In this connection,
the ITC in a meeting held on 2-4 December 1963 regarding the high
world price for tin reportedly concurred in US sales of up to 500 tons
of tin weekly at any time that the price is between 965 and 1, 000 pounds
per long ton. In addition, it was reported that the ITC would be pre-
pared for the US to sell tin in "quantities sufficient to meet demand"
when the price is about 1, 000 pounds sterling per long ton.
Analyst:
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7. Decline in
Chinese Communist Exports of Tin Helps Force World Price to Record
Level --- January 1964 (SECRET/NO FOREIGN DISSEM
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Chinese Communist Exports of n Helps Force World Price
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It to requested that the attached copies of CIA/RR CB 6L-7,
Dec ,ne in Chinese C .uniet Exports of Tin Helps Force World.
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?roject No. 23. 5076 Report Series CIA/RR CB 64-7
Title Decline in Chinese Communist Exports of Tin Helps Force World Price to
January
1964
(SECRET NO FOREIGN DISC M
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