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.

"Other base metals have fallen much more than tin, so I think there's certainly room for a further drop in tin prices," said a trader in Kuala Lumpur.

"Prices will stay weak in the first quarter, and any recovery can only be seen in the second half of the year," he said.

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 Malaysiaimposed 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 to the Asian financial crisis," said an industry source."Korea has not been in the market for some time while Japanese buying has not been consistent and on small volumes," the source said.

The sharp fall on Wednesday attracted some fresh Japanese demand."Japanese buyers were again in the market this morning," another trader said, adding that Japanese buying was likely to continue if the price stayed below 19 ringgit a kg.The industry source said an earlier squeeze in Europe had also evaporated.

"Demand from Europe has also slowed as you can seen from the increase in LME tin stocks," said the source.

LME tin stocks totalled 8,295 tonnes as at December 31, up from around 5,000 tonnes three months earlier.

Traders said theyexpected 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 international trading. 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.