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number of locally registered exporters will start trading tin through a domestic exchange by the middle of this month to comply with a new tin export rule.

Indonesian Tin Association president Hidayat Arsani said on Monday that 18 registered tin exporters would open a tin market named Serumpun Tin and sell physical tin contract transactions on the Jakarta Futures Exchange (JFX).

'By doing this, we will provide an alternative to what already exists and avert a monopoly,' Hidayat told The Jakarta Post. The association's exports account for about 70 percent of Indonesia's total exports.

In addition to the JFX, the Indonesian Commodities and Derivatives Exchange (ICDX) also handles tin trading.

Hidayat asserted that the move would help set better prices and better accommodate the interests of producers in the Bangka-Belitung Islands, the country's biggest tin suppliers.

Under the new trading plan introduced last year, the government requires registered exporters to sell their tin metal through local commodity exchanges beginning Aug. 31.

The move emerges as Indonesia, the world's biggest tin exporter, gears up to enhance its profile in the commodities markets, which could lead to it determining its own price benchmark.

So far, prices of commodities are largely set by overseas exchanges, with tin prices set by the London Metal Exchange (LME). The government aims to change the situation because it does not reflect developments in the domestic market as one of the biggest producers of some key commodities, such as palm oil, rubber and cocoa.

The new trading rule follows on the heels of another rule passed last month that raises the required purity level of tin exports to 99.9 percent, which business players say will reduce exports in the next few months and push up prices.

Trade Ministry director general Bachrul Chairi said the government welcomed wide participation from domestic exchanges and would not limit tin trading to a certain exchange.

'Any exchange can trade tin locally as long as it secures a permit from the Futures Exchange Supervisory Board [Bappebti],' he said.

The most important point would be to boost trade volume through the exchanges and improve tin prices in the future, Bachrul added.

Indonesia previously tried to sell physical tin contracts through the Indonesia Tin Market (INATIN), which debuted on Feb. 1 last year at the ICDX.

However, a few months after its establishment, the tin market failed to carry out sufficient transactions as tin exporters failed to honor their commitments, although prices increased to a record US$25,550 per ton.

After trading a total of 116 lots last year, business on the ICDX's INATIN contract has withered away with no transactions recorded this year. In comparison, the LME's tin contract, which dates back to 1877, had traded more than 60,000 lots by mid-July, according to data compiled by Reuters.

The ICDX's contract was expected to trade at a premium of about $300-$400 per ton higher than the LME contract, due to its minimum purity requirement of 99.9 percent for the ingots traded. However, the Indonesian contract was last quoted at $22,600, more than $3,000 above the LME price of $19,543, which is down around 15 percent this year, according to Reuters.