• Tin metal prices close to breaking through $US30,000 per tonne ($37,300/tonne) barrier for first time since 2011
  • ‘Demand for tin has accelerated in recent months’ – International Tin Association
  • Shipping delays, rains in Indonesia, accelerating demand from chemical and electronics sectors, all drive up tin’s price

 

Electronics, consumer goods and construction plus plastics firms are all feeling the sharp rise in tin metal spot prices which are trading within touching distance of $US30,000 per tonne cash basis, their highest since 2011.

The UK-based International Tin Association keeps a close watch on tin’s fundamental market conditions for its members that are producers of the metal.

A combination of demand and supply factors are responsible for the current high prices for tin, said James Willoughby, the International Tin Association‘s market analyst.

“Demand for tin has accelerated in recent months,” he said. This lines up with reported shortages for semiconductors, another key component in the electronics industry.

“This increased demand, combined with severe shipping delays, has significantly tightened the market, causing prices to rise considerably since the beginning of the year,” he said in an emailed response to Stockhead‘s questions.

 

Electronics, plastics and construction sectors consume tin

Tin is used as a lead-free solder to connect electronics components in products like computers, smartphones and motor vehicles, and demand for all of these products is increasing.

“Higher demand for electronics – as a result of home working and schooling – has definitely been a factor in the strong tin market,” said Willoughby.

“We believe that as consumers are unable to travel, they are choosing instead to upgrade to larger appliances in their homes. These typically use more tin per device, and so have been more beneficial than the demand for laptops, related to home working,” he said.

Sector-specific applications for tin such as in the chemicals and plastics industries are also driving demand higher for tin.

“We have also seen increased demand for tin chemicals, particularly in the US. Homes in the country are typically covered with a PVC plastic cladding, which uses a tin-based stabiliser to prevent degradation from sunlight,” he said.

“US home construction has been particularly strong over the last six months as some people look to move out of cities for health reasons, while others are buying second homes due to the low borrowing costs at the moment.”

China has become a voracious consumer of tin on the international market. Its net imports were 17,700 tonnes of the metal in 2020.

The Asian nation has increased its imports from a range of countries including Russia, Laos, Vietnam and the Democratic Republic of Congo, as well as Australia.

 

The LME market tin price is at its highest since mid-2011. Image: LME

 

Supply side issues also pressure tin prices

There are also some tin-specific factors at play that are impacting prices for the base metal, said Willoughby.

“On the supply side, production of refined tin has remained slightly lower than normal due to rains in Indonesia preventing offshore mining,” he said.

“This has prevented offshore mining for a few months now, and so there has been less tin for smelting.

“Combined with a slow restarting to smelting operations at the major Bolivian smelter EM Vinto, there is slightly less tin in the market than this time last year.”

Port congestion at key delivery ports in the US and delays to ships is also contributing to the push higher in tin prices.

“Shipping delays and port congestion around the world are holding up deliveries of tin metal, particularly to the US where there is no domestic production,” said the ITA’s tin market expert.

“To cope with the delays, consumers are attempting to buy tin on the spot market,” he said.

Turning to the recent political instability in Myanmar which has suffered a military coup, this has not greatly disrupted tin production in the Asian country despite perceptions to the contrary.

“While we do not think that the political changes in Myanmar will affect tin production, some in the tin market may not share our view and this perception could have partially been behind the recent rise in tin prices,” said Willoughby.

“Myanmar produced around 39,000 tonnes of tin-in-concentrate in 2020, making it the world’s third largest tin mining country. It’s supply has been falling since a peak in 2017.”

Myanmar, which borders southern China, supplies much of the Asian tiger’s appetite for the base metal, said the ITA.

 

Tin consumers forced to buy on spot market

At Tuesday’s market close, tin for immediate delivery was trading at $US29,485 per tonne, and for typical three-months delivery the base metal was at $US26,975 per tonne.

“Prices on the spot market are typically higher than ordering on long-term contracts, but at the moment there is little tin additional to that already tied up in contracts, and so these prices have been rising very quickly,” Willoughby said.

Stocks of tin at London Metal Exchange warehouses, a key world-wide distribution network for the metal, are only 1,030 tonnes after customers booked out 480 tonnes on Tuesday.

“LME tin stocks are low at the moment because demand has been so high,” said Willoughby.

“Typically tin users have regular contracts for tin, but at the moment they are requiring more metal than usual, or their deliveries are being delayed due to the shipping issues around the world.

“Due to the extremely high demand, some traders are not able to supply additional metal, and so users are having to withdraw metal from the LME warehouses,” he said.

Willoughby went on to stress that the ITA is forecasting that tin prices will peak in the June-ended quarter and then come off for the rest of 2021.

“Production is likely to increase in Indonesia again once the monsoon season ends.

“There may be a boost in artisanal tin mining due to higher prices, and some near-surface, lower grade ore may be economic at these prices, but we do not think there will be a significant rise in production related to the price movements,” he said.

He went to state that the market tightness for tin may be short-lived as demand starts to ease in the months ahead.

“We are seeing demand moving back to 2019 levels; the market was well supplied then and we would expect it to be again this year,” he said.

 

Australian tin sector well positioned

Australia has only one major tin-producing mine, Renison Bell in Tasmania, and its production goes to export customers as domestic consumption is quite low.

“All of the tin mined there is exported to smelters in Asia; there is no smelting capacity in Australia,” said Willoughby.

“Domestic demand for tin is relatively small – around 250-350 tonnes per year. If there was a smelter in Australia, mining at Renison would be more than adequate for Australian demand,” he said.

Renison Bell’s operator and 50 per cent owner Metals X (ASX:MLX) said the mine produced 2,000 tonnes of tin-in-concentrate in the December-ended quarter, down 14 per cent on the September-ended quarter.

All-in sustaining cash costs for the Renison mine were $US20,978 per tonne in the December quarter, and the mine has a production target of 8,200 to 8,500 tonnes for the 2021FY.

There are ASX companies developing tin projects in Australia to supply the export market in the years ahead.

They include Australian Tin Mining (ASX:ANW), Stellar Resources (ASX:SRZ), and Venture Minerals (ASX:VMS).

 

ASX share prices of Australian Tin Mining (ASX:ANW), MetalsX (ASX:MLX), Stellar Resources (ASX:SRZ), Venture Minerals (ASX:VMS)

At Stockhead, we tell it like it is. While Venture Minerals is a Stockhead advertiser, it did not sponsor this article.