Tin Prices Rise Amid Supply and Demand Tensions
The three-month price of tin, a metal commonly used in soldering, has risen by 27% since the beginning of January, currently trading at $32,250 on the London Metal Exchange (LME). Despite this price strength, the International Tin Association (ITA) reported that tin demand was weaker than expected last year and anticipates only a modest recovery in 2024.
In 2023, according to a survey involving 80 companies accounting for approximately 42% of global demand, refined tin usage fell by 3.9% year-on-year to 357,100 metric tons. This decline was more pronounced than the slight annual decrease of 1.6% previously anticipated by these companies.
According to ITA's provisional estimates, total tin usage, including both refined and unrefined forms, contracted by a sharper 4.9% year-on-year to 433,000 metric tons.
Survey participants from ITA forecast a 3.0% increase in demand this year, primarily driven by China. The soldering sector, which makes up more than half of global tin usage, experienced a 1% decline last year. However, this year, a 2.5% increase in tin usage within this sector is anticipated, supported by economic recovery and the gradual removal of lead in circuit board soldering.
Other sectors experienced more significant declines in tin usage last year. The chemicals sector saw a decrease of 3.1%, tinplate fell by 7.6%, and the usage of copper alloys dropped by 16.9%. All sectors, except for the tin-copper segment affected by the ailing construction sector in China, are expected to recover in 2024.
Weakness in global demand has contributed to an increase in exchange inventories throughout 2023 and into early 2024. Registered stocks on the LME and Shanghai Futures Exchange (ShFE) rose from 10,000 tons at the beginning of last year to around 25,000 tons by May. Despite Indonesia suspending exports due to licensing delays in the first two months of 2024, stocks continued to rise, with most of the increase coming from China. ShFE stocks hit an all-time high of 17,818 tons in May.
By the end of 2023, consumers were holding stocks equivalent to approximately 3.8 weeks of global supply, a figure that remained largely unchanged throughout the year. Companies participating in the ITA survey expect stock cover to drop to 3.4 weeks by the end of this year, reflecting anticipated increases in demand.
The ITA survey indicates that China is leading a moderate demand recovery, which has been exacerbated by production challenges. Chinese smelting facilities have been facing raw material shortages since the suspension of the Man Maw mine in Myanmar last August, which supplies many Chinese smelting plants and accounts for about 7% of global tin production. Tin concentrate imports from Myanmar have since dropped 52%, decreasing to 66,000 tons year-to-date.
Consequently, Chinese buyers are increasingly turning to the international market for refined tin, with imports approaching 2,000 tons in September, the highest monthly figure since January. This has resulted in China being a net importer for the second consecutive month.
The current situation surrounding the Man Maw mine remains uncertain and is a significant factor in the tin supply landscape. The decline in global demand in 2023 has led to an increase in inventories, which has helped mitigate market volatility so far.
However, while a moderate demand recovery is anticipated this year and the raw material shortage persists for Chinese smelting facilities, the tin market might experience increased turbulence in the upcoming period.