0

Melbourne November 2016

The LME &Tin

1

Tin on the London Metal Exchange

The LME Tin contract one of the first traded contracts, launched at the inception of the LME in 1877

2

LME exchange pricingProviding confidence in both price discovery and standards relating to the underlying metal

The LME price ensures

• Material of an LME registered brand• Stored in an LME approved warehouse• Duty unpaid – no taxes / VAT etc.• Buyer to pay for delivery out of warehouse

Benefits of LME pricing

• Regulated market• Fully transparent electronic market• Traded and tradable real time prices• Precision in hedging• Multiple Broker Execution• Clearing house guarantee in counterparty default

LME Tin contract specifications

Underlying metal

Tin ingots of 99.85% purity (min) conforming to BS EN 610:1996

Lot size 5 tonnes

Prompt dates

Daily: to 3 months Weekly: 3 to 6 months Monthly: 7 to 15 months

Price quotation US dollars per tonne

Tick size (per tonne)

Outright Carries Ring $5.00 $0.01 LMEselect $5.00 $0.01 Inter-office $0.01 $0.01

3

15M

LME Tin contract prompt date structureThe LME’s prompt date structure for Tin runs daily for the first 3 months, then weekly until the end of the 6th month and then monthly out to 15 months

Tomorrow 3M

3rd Wednesday

Daily prompt dates: Cash to 3 Months

Weekly prompt dates: Wednesdays , 3 to 6 months

Monthly prompt dates: 3rd Wednesday, 7 to 15 months

Illustration of the three phases of the LME’s prompt date structure

1. Daily 2. Weekly 3. Monthly

6M

3rd Wednesday prompt dates are available in all months

4

Volumes by Client Type

Source: LME Research; COTR Open Interest Ratio is for Long + Short + Net Producer/Consumer divided by money manager . Displayed ratio is the average from Jan 2015- Aug 12th 2016Entities are classified at broker discretion according to the primary function of the entity. Entities may be involved in dual business

Positions held by the Tin hedging community outnumber speculators by nearly 60%

39%

31%

16%

8%6%

Total LME 2016

Producer / Merchant /Processor / User

Money Manager

Broker Dealer / IndexTrader

Algo/Prop

Other Reportables

46%

19%

25%

1% 9%

Tin 2015

CME Copper

LME Copper

LME Tin

Open Interest Ratio: Money Manager Positions / Hedging Positions

Speculators Hedging Risk

5

Price PerformanceStrong recent Tin performance, second best performer Year-To-Date

0%

5%

10%

15%

20%

25%

30%

35%

$13,000

$15,000

$17,000

$19,000

$21,000

$23,000

$25,000

$27,000

LME Tin 3 Month ($/mt) ATM Volatility

6

Stock levelsStocks have dramatically shifted to Asia, In October stocks are their lowest since 2008

0

5

10

15

20

25

30

Thou

sand

s

Europe Americas Asia

7

Backwardations to incentivise deliveryTom/Next spread is managed by lending rules in case of a dominant holder

-$50

-$40

-$30

-$20

-$10

$0

$10

$20 Tom/Next

High Low-$300

-$250

-$200

-$150

-$100

-$50

$0

$50

$100 3M- Cash

Con

tang

oBa

ckw

arda

tion

8

$12,000

$13,000

$14,000

$15,000

$16,000

$17,000

$18,000

$19,000

$20,000

$21,000

$22,000

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Consumer Longs Producer/Merchant forward selling LME Tin 3 Month ($/mt)

Consumer Longs down 22%

Physical market positions in relation to pricesPhysical positioning has been relatively stable this year. Producers and merchants forward selling yet to take full advantage of higher prices

Producer/Merchant –Forward selling (# shorts)

9

4%

6%

8%

10%

12%

14%

16%

$13,000

$14,000

$15,000

$16,000

$17,000

$18,000

$19,000

$20,000

$21,000

LME Tin 3 Month ($/mt) Net money manager (% of O.I)

Money manager positioning increasingNet bullish positioning has been rising through 2016 and mostly price correlated

Longs -Shorts (as % of open interest)

10

Tin contracts: Volume and Open Interest

Tonnes traded per month (‘000 m tonnes) Month end open interest (‘000 m tonnes)

SHFE Tin contract has rapidly grown in traded volume since launch in March 2015

0

200

400

600

800

1,000

1,200

1,400

Jan-

14M

ar-1

4M

ay-1

4Ju

l-14

Sep-

14N

ov-1

4Ja

n-15

Mar

-15

May

-15

Jul-1

5Se

p-15

Nov

-15

Jan-

16M

ar-1

6M

ay-1

6Ju

l-16

Sep-

16

LME SHFE

0

20

40

60

80

100

120

140

160

Jan-

14M

ar-1

4M

ay-1

4Ju

l-14

Sep-

14N

ov-1

4Ja

n-15

Mar

-15

May

-15

Jul-1

5Se

p-15

Nov

-15

Jan-

16M

ar-1

6M

ay-1

6Ju

l-16

Sep-

16

LME SHFE

11

0

1

2

3

4

5

6

7Open Interest in days of volume

SHFE LME

Open interest

Month end open interest divided by ADV LME Volumes exclude member give up, admin trades

The SHFE Tin contract appears to be predominantly used on a day trading basis

Volume = 1 days positons

Day traders> positon holders

LME tin positons averages 4.8 days of volume

12

Forward Curve

SHFE is close Oct 10th. LME close Oct 7th

The LME forward curve has considerable forward open interest, supporting longer term hedgingSH

FELM

E

0

2

4

6

8

10

12

14

¥115,000

¥120,000

¥125,000

¥130,000

¥135,000

Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17

(‘000

mt)

Open interest (mt) Price (Yuan/mt)

024681012141618

$19,600

$19,700

$19,800

$19,900

$20,000

$20,100

$20,200

(‘000

mt)

Open Interest (mt) Price ($/mt)

13

ICDX and LME tin is correlated2016 Jan-August 98% r squared correlation

14

LME initiatives to support the Tin industry

15

LME Tin Brands

Application also received and in process for MSP PT Mitra Tin brand (6.72ktpa)

9 out of the world’s top 10 producers have LME deliverable brands Lower thresholds to encourage additional listings

Country Brand ProducerBelgium MC Metallo-Chimique N.V.Bolivia ENAF Empresa Metalurgica Vinto

BrazilMAMORE Mineracao Taboca SAWHITE SOLDER BRASIL White Solder Metalurgia e Mineracao Ltda

China

JH Laibin China Tin Smelting Co., Ltd.PGMA CNMC (Guangxi) PGMA Co., Ltd.YS Gejiu Zili Mining and Smelting Co., Ltd. YT Yunnan Tin Company LimitedYUNHENG Yunnan Chengfeng Non-Ferrous Metals Co., Ltd.YINSHENG Gejiu Jinye Mineral Co Ltd

Indonesia

BANKA PT. Timah (Persero) TBKIMLI PT. Bukit TimahKUNDUR PT. Timah (Persero) TBKMENTOK PT. Timah (Persero) TBKRBT* PT. Refined Bangka TinTININDO PT. Tinindo Inter NusaIMLI BELITUNG PT. Babel Inti Perkasa

Malaysia MALAYSIA SMELTING CORPORATION Malaysia Smelting Corporation Bhd.

ThailandPHUKET Thailand Smelting & Refining Co LtdTHAISARCO Thailand Smelting & Refining Co Ltd

Added since 2015

16

LMEshield – secure and effective commodity receipting

• 2001 – LME develops electronic system for warranted-metals, ‘LMEsword’ (c. 5 m tonnes in/out per annum)

• 2014 – Post-Qingdao, leading banks request LME to extend services and expertise to off-warrant market

• 2016 – Launch of LMEshield, building on LMEsword experience and with support from the industry

LMEshield background

• A secure global electronic register for efficient creation, management and transfer of off-warrant warehouse receipts

What is LMEshield?

Expanded trade finance

availabilityReduced risk for

fraud

Improved global off-warrant

warehousing standards

Reduced risk in trading

commodities held on receipt

Efficient processes across

the market

LMEshield

Banks and financing institutions

Warehouses and storage facilities

Physical commodity traders and owners

17

LMEshield – further details: LMEShield@lme.comSupporting the warehousing industry beyond existing LME jurisdictions

How can LMEshield help you?Warehouses • Enhanced risk management, improved

customer confidence, operational savings

Banks financing institutions• Reduced risk of fraud and standardisation

of receipt structure

Physical commodity traders and owners• Transparent financing and efficient

ownership transfer

1. Ongoing working group of up to 20 warehouses, banks and trading firms

2. MOU signed 21st March with Mercuria, Henry Bath and CMST to list LMEshield warehouses along China’s ‘The Belt and Road’ routes

3. April 2016 launch of LMEshield service

4. Fee-free usage until September 2016, with fee credit rewards for usage prior to September

Recent developments

LMEshield jurisdictionsDay-1 South American jurisdictions

• Brazil• Chile• f

Rest of South America LMEshield locations

Other Day-1 LMEshield jurisdictions

Belgium UAE Spain

Germany UK Singapore

India USA South Korea

Italy Japan South Africa

Sweden Malaysia Qatar

Netherlands Saudi Arabia Taiwan

18

© The London Metal Exchange (the “LME”), 2016. The London Metal Exchange logo is a registered trademark of The London Metal Exchange.

All rights reserved. All information contained within this document (the “Information”) is provided for reference purposes only. While the LME endeavours to ensure the accuracy, reliability and completeness of the Information, neither the LME, nor any of its affiliates makes any warranty or representation, express or implied, or accepts any responsibility or liability for, the accuracy, completeness, reliability or suitability of the Information for any particular purpose. The LME accepts no liability whatsoever to any person for any loss or damage arising from any inaccuracy or omission in the Information or from any consequence, decision, action or non-action based on or in reliance upon the Information. All proposed products described in this document are subject to contract, which may or may not be entered into, and regulatory approval, which may or may not be given. Some proposals may also be subject to consultation and therefore may or may not be implemented or may be implemented in a modified form. Following the conclusion of a consultation, regulatory approval may or may not be given to any proposal put forward. The terms of these proposed products, should they be launched, may differ from the terms described in this document.

Distribution, redistribution, reproduction, modification or transmission of the Information in whole or in part, in any form or by any means are strictly prohibited without the prior written permission of the LME.

The Information does not, and is not intended to, constitute investment advice, commentary or a recommendation to make any investment decision. The LME is not acting for any person to whom it has provided the Information. Persons receiving the Information are not clients of the LME and accordingly the LME is not responsible for providing any such persons with regulatory or other protections. All persons in receipt of the Information should obtain independent investment, legal, tax and other relevant advice before making any decisions based on the Information.

LME contracts may only be offered or sold to United States foreign futures and options customers by firms registered with the Commodity Futures Trading Commission (CFTC), or firms who are permitted to solicit and accept money from US futures and options customers for trading on the LME pursuant to CFTC rule 30.10.