LONDON — Despite much hand wringing, tin trading has survived the crisis triggered last October when the International Tin Council announced it had run out of cash to continue supporting world market prices.
At first, the Cassandras had warned of doom unless the council, representing 22 leading producing and consuming nations, swiftly resolved to meet its estimated debts of $1.4 billion.
At stake were precarious economies of producing countries, the livelihood of traders, the balance sheets of creditor banks and London's reputation as a top financial center.
Yet since then, life for producers and users of the metal continues, even though the arteries of commerce have changed and prices have fallen.
Gray markets and direct deals between buyers and smelters are bypassing the London Metal Exchange, through which the lion's share of the world's tin trade was funnelled before it suspended tin dealings on Oct. 24.
There has been more substitution of aluminium cans for tin ones, but the world tin surplus that spawned the tin council's problems ensures that anyone who wants the metal can get it.
Brazil, which is not party to the council pact, remains an eager seller, while small-scale producers in places such as Malaysia are banding together to ease sales negotiations with buyers. They may have said goodby to the exchange for good.
Although the tin market has been in disarray for three months, the full impact of the tin council's insolvency has yet to be felt.
But the prospects are not encouraging. Before the exchange ceased tin trading, the metal fetched $5.17 per pound. The free market price is now around $3.62 per pound, and the fall has already taken its toll.
Thousands of miners in countries such as Malaysia and Thailand have been laid off, and others are worried for their future. Traders threatened with bankruptcy, bankers and the future of the exchange wait while the tin council dawdles over deciding whether to accept one of the many rescue packages it has been offered.
Two court cases have ruled the tin council is immune from prosecution. Since it is apparently not legally liable for its outstanding commitments, the council has not rushed to reach a decision.
By delaying reopening its tin market until the council guarantees to honor its debts, the exchange has put off deciding how to prevent the panic and price collapse that would result if it were to resume tin trading now. However, such an unreal stalemate cannot last indefinitely. The exchange will be forced to reopen to try to salvage some former business.
In such circumstances, say analysts, some brokers are bound to be hurt. Other business on the exchange, which also runs contracts in other important raw materials such as aluminium, copper and lead, will also shrivel as dealers turn wary of trading with brokers who may be bankrupt tomorrow.
Since many trading firms also deal in other commodities, the malaise may spread beyond the exchange, endangering London's lucrative reputation as a leading world financial center just as it prepares to expose its institutions to the full blast of international competition.
The banks that have lent money to the tin council can survive to lend another day. But some producers, particularly those that rely on tin exports for their well-being, such as Bolivia, could face further belt-tightening after five years of economic decline and maybe even political unrest.
If so, international bankers are worried about how such nations might react when it comes to repaying their foreign debts if they see Western states like West Germany and France walking away from their financial commitments.