Loading icon Loading
3 min read

Tin remains the superstar on the London Metal Exchange of industrial metals.

At $37,350 per tonne, the LME’s three-month tin is up 77% since the start of the year, far outperforming aluminium, which is the second best performer with a gain of “only” 26%.

LME stocks stand at just 720 tonnes, failing to rebuild despite the huge incentive for physical delivery. Shanghai Futures Exchange inventory is down to 1,256 tonnes and between them the two end markets have enough tin to cover a minimum of two days of global demand.

There have been a couple of sharp pullbacks in recent months and there could be more. But even if a tsunami of selling led to a 20% drop, tin would still be priced near pre-2021 all-time highs.

Fitch Solutions is just one of many that has revised price expectations upwards. It has just raised its forecast for 2022 from $26,000 to $32,500 per tonne.

Fitch analysts expect “tin market fundamentals to soften slightly towards 2022, driven by increasing supply”, but to “remain on a solid upward trend over the next decade” with an average price of $35,500 by 2030.

The common theme behind these high forecasts is that tin needs a period of sustained higher prices to provide the incentive to increase supply.

The global supply chain, dominated by a handful of producers, has been deeply shaken by COVID-19 and some sort of normalisation is expected in the coming months.

Malaysia’s MSC hopes to restore capacity after a series of furnace failures and lockout measures, while Chinese producers appear to have largely escaped the country’s latest energy crisis. China’s tin production rose 2.8% month-on-month in October and cumulative output increased 15.1% in the first 10 months of the year.

China has become a net exporter of refined tin this year, at a rate of 9,800 tonnes. Shipments of 1,107 tonnes in September included 291 tonnes to the Netherlands, 225 tonnes to Italy and 40 tonnes to Romania, attesting to gaps in the European physical supply chain.

However, Chinese producers have become increasingly dependent for raw material on neighbouring Myanmar, which has emerged as the world’s third largest supplier over the past decade.

Investment in formal mining, by contrast, has remained extremely patchy, with tin remaining below the radar of investors and large mining companies.

If this is to change, the price will have to move into a higher range and stay there for a couple of years to attract serious investment in new production capacity.

The reason the tin market needs more supply is that its use profile has changed over the past 10 years, positioning it to benefit from the energy transition and a fourth industrial revolution.

Although commonly associated with tin, packaging accounted for only about 12% of global refined tin use last year, according to the International Tin Association (ITA).

Most of last year’s demand – 48% – came from the electronics sector, where tin is used to solder circuits. And booming demand for electronic goods is expected to drive a 7.2% surge in global tin use this year, according to the ITA’s annual survey of tin users.

Consumers will look to reduce tin use, but the miniaturisation of tin solder has been a recurring industry theme over the past decade, which is reaching its technical limits. In fact, tin is expected to benefit from the final stages of the phase-out of lead in solder over the next two years.