The Kuala Lumpur Tin Market (KLTM) price closed at 18.72 ringgit ($4.93) a kg on Thursday, its lowest level since November 1997, after a 50-cent drop on Wednesday.

Traders said slow demand as well as weak London Metal Exchange (LME) prices would continue to weigh on the local market.

A Reuters poll of some 20 analysts suggested LME average cash prices for aluminium, copper, lead, nickel and tin would be lower in 1999 than in 1998 as a whole.

The Kuala Lumpur tin price had fallen gradually from just below 24 ringgit a kg since September 1 when Malaysia imposed foreign exchange controls and fixed its ringgit currency at 3.80 per US dollar.

Poor demand, particularly from recession-hit Asian economies, contributed to the downtrend.

"Buying from traditional buyers like Japan, Taiwan and Korea has slowed down significantly due tothe Asian Financial crisis," said an industry source. The sharp fall on Wednesday attracted some fresh Japanese demand.

The industry source said an earlier squeeze in Europe had also evaporated.

LME tin stocks totalled 8,295 tonnes as at December 31, up from around 5,000 tonnes three months earlier. Traders said they expected some good support at the 18 ringgit a kg level, although the performance of the LME would continue to influence the price direction here.

The local tin price had risen from 14 ringgit a kg before the start of the Asian financial crisis in July 1997 to just under 24 ringgit in late August last year, largely due to a sharp depreciation in the ringgit which made Malaysian tin competitive in the export market.

"Unless the ringgit is allowed to weaken, we may not see that level again," said the trader in Kuala Lumpur.

In a bid to prevent further fluctuations in the ringgit, Malaysia in September imposed capital controls, effectively withdrawing the currency from internationaltrading. It also pegged the ringgit at 3.80 per dollar. The Malaysian currency had hit a record low of 4.88 a dollar in January 1998.