When the topic of tin comes up, a lot of people think of baked beans – well, maybe not beans, but the tin they come in.
Tinplate is a large consumer of metallic tin. However, due to technological development over the decades, many cans are now coated with resins. Those who still use tin work on such thin coatings that tin prices are hardly a cause of inflation for your stable pulses.
By far the most critical application of tin is soldering for the electronics industry and semiconductors in particular. Almost a single electronic element works without some amount of tin solder. Industry consumes about half of all tin consumed in the world.
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Tin price gains
Anyone who follows the commodity price charts – which pretty much matches all of our readers – is well aware that the price of tin has been steadily rising over the past year. The price saw its biggest rise in the past six months, as speculators and commercial buyers struggled to get a head start.
Reuters announces London Metal Exchange (LME) three-month tin price peaked at 10 years of $ 30,650 per metric ton on Tuesday. The metal is downgraded so much that the spot price is about $ 2,000 per ton higher, with a quick delivery time.
The inventory is very low, reports Reuters. There are only 1,235 tonnes of tin in LME warehouses, most of which is destined for physical loading.
Reuters reported that the remaining 360 tonnes represented about eight hours – yes, you read that correctly – of global consumption, based on a demand for refined tin of 359,000 tonnes in 2019.
Partly due to global stock depletion and hampered by global logistics delays widely reported by ourselves and others, physical supply chains to European and North American buyers are depleted.
The metal in Rotterdam commands a premium of $ 1,000 to $ 1,300 a tonne over already demoted LME cash, the post reports. Baltimore metal is even more expensive, valued at a premium of $ 1,800 to $ 2,150.
The World Bureau of Metals Statistics (WBMS) reported a surplus of 2,200 tonnes from January to March 2021 this year based on trade statistics. However, according to Reuters, the International Tin Association (ITA) estimates that the market has been in short supply for five of the past six years to the tune of 28,000 metric tonnes. ITA expects a further deficit of 2,700 tonnes this year, a position supported by reduced physical stocks.
Tin versus other base metals
Tin differs from other base metals in several ways.
Its smaller volumes and geographic concentration discouraged the participation of large multinational miners. Production is mainly in the hands of nationalized operations such as those in Indonesia. PT Timah and many Chinese producers (with the exception of the largest, Yunnan Box).
Swing production comes from the artisanal mining sector. This sector represents around 40% of world tin production and responds well to rising prices.
Production is therefore likely to increase in response to current high prices. However, this may not be visible for a while as the material makes its way through the supply chain.
WBMS’s positive Q1 surplus report may reflect the increased volumes on trade data before it had a significant impact on trade prices.
But if so, the reduction in inventories since the last tin surge in 2010-11 will take a considerable time to replenish. In addition, demand continues to increase, as semiconductor production continues to increase, due to the global recovery but also investments in electrification and renewables around the world.
It looks like Tin may be the place to be for a while.
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