Tin has been the second-best performer among the London-traded base metals suite so far this year. 
The soldering and packaging metal is currently trading around $16,800 per tonne on the London Metal Exchange, a year-to-date gain of 17%. 
Only zinc has done better thanks to an increasingly compelling story of supply crunch. 
Tin has also been buoyed by supply woes in the form of reduced exports from Indonesia. 
But exports are now showing signs of normalising, LME stocks have been gradually rebuilding and spread tightness appears to be dissipating. 
All of which begs the question as to whether tiny tin, one of the least active contracts traded on the LME, is heading for a fall. 
Headline LME tin stocks currently stand at 6,425 tonnes, compared with a low of 3,655 tonnes at the end of February. 
More significantly in terms of trading liquidity, on-warrant stocks have rebuilt from 3,235 tonnes to 5,655 tonnes over the same period. 
Most of the inflow has come to Malaysia’s Port Klang and Singapore. 
Higher stocks have served to loosen the LME spread structure. The benchmark cash-to-three-months period was valued at a small backwardation of $4 per tonne at the close of business Thursday. 
At one stage in February that cash premium flexed out as wide as $220 per tonne. If the loosening trend continues, the front part of the curve may return to a state of contango for the first time since January. 
The persistent tightness so far this year has deterred potential short-sellers. 
It’s noticeable that the 99 money managers showing up in the LME’s Commitment of Traders Report have added net length since January, when tin spreads first started flashing warning signs. 
There is still some positioning tension in the London tin market thanks to a dominant long position holding 30-40% of available (on-warrant) stocks, although given the overall size of LME tin stocks, this is a far cry from the sort of mega position that has roiled the LME aluminium market in recent months. 
These developments in the London market reflect a return to something close to normal service by Indonesia’s tin producers. 
Exports jumped to 6,911 tonnes in April after slumping by 50% to 9,710 tonnes in the first quarter of the year. 
In part the early-year slide in production and exports was down to extreme weather conditions. State-owned PT Timah, for example, blamed a 40% fall in production on the disruption to its dredging operations from a combination of heavy rain, floods and stormy seas. 
But in part it was also down to yet another tightening of the screws by the Indonesian authorities on independent operators clustered on the tin-rich islands of Bankga and Belitung. Every producer has been forced to go through an audit to ensure they meet tougher environmental standards as a condition for getting an export licence. 
And not all of them have passed. 
PT Refined Bangka Tin (RBT), for example, a fairly sizeable operator with annual capacity of around 12,000 tonnes per year, failed its environmental health-check and will now close permanently. Just another milestone in a longer-term structural decline in Indonesia’s tin sector. 
According to tin producers association ITRI, Jabin Sufianto, President of the Association of Indonesian Tin Exporters (AETI), told a recent conference in Peru that annual exports in 2016 will be around 66,000 tonnes. 
Even if that proves correct, and it looks a little on the high side given year-to-date exports of just 16,600 tonnes, it would still represent a fourth consecutive year of lower exports from the world’s largest exporter. A return to normal service by Indonesian exports may well undermine LME tin prices via a loosening of the spread structure in the short term, but the longer-term story of a structurally-challenged supply chain hasn’t really changed. 
Moreover, LME stocks liquidity is potentially facing another structural change, this one in China. China is the world’s largest producer of tin but has historically tended to be a small net importer of refined metal. 
And there is nothing in the headline trade figures to suggest this has changed in recent months. Net imports were 2,400 tonnes in the first quarter of the year, up slightly from 1,600 tonnes in the year-earlier period. 
Nor is there any evidence that metal is seeping out in other forms, as it has at times done in the past. Exports of tin products were down by 12% at 1,005 tonnes in January-March and were broadly matched by imports. 
This is slightly surprising since it was only in January that producers were threatening coordinated cutbacks and calling for government assistance in the face of over-supply and weak prices. 

* Andy Home is a Reuters analyst. The views expressed are those of the author.