LONDON: Tin’s rollercoaster ride spins into the New Year, promising more thrills and spills after a tumultuous performance in 2022.
London Metal Exchange (LME) three-month tin hit an all-time high of $51,000 per tonne in March before slumping to $17,350 in October, at which point it was below many operators’ production costs.
The price rebound has been equally ferocious, with tin currently trading just below the $30,000 level, up 17% on the start of the month, making it the strongest performer among the LME base metals.
The suspension of operations at Peruvian producer Minsur’s San Raphael mine due to social unrest has fanned the bull flames. However, arguably more significant to market dynamics has been the strength of China’s import appetite.
Last year’s price collapse reflected a robust post-COVID supply recovery coupled with a drop in solder demand from the electronics sector after the lockdown boom of 2020 and 2021. Chinese buyers have scooped up much of the resulting surplus metal, leaving the rest of the world more finely balanced than expected.
IMPORT BOOM
China imported 31,115 tonnes of refined tin last year, up from just 4,900 tonnes in 2021 and the highest volume since 2012. The flow of unwrought metal was two-way. China also exported 10,733 tonnes of tin, mostly to Asian neighbours. But 2,025 tonnes were also dispatched to the Netherlands, attesting to the lingering tightness in parts of the physical supply chain outside of China.
However, the heavy volumes of inbound shipments meant that net imports of 20,380 tonnes were also the highest in a decade.
The largest supplier last year was Indonesia, imports jumping to 24,800 tonnes from 3,500 in 2021. Indonesia lifted its total tin exports by 14% in 2021 and by another 5% in 2022. At 78,117 tonnes, last year’s tally was the highest since 2017, but the market impact has been much diminished by China’s buying spree.
China’s own production of refined tin was flat year-on-year at 165,900 tonnes in 2022, according to Shanghai Metal Market. Any domestic raw materials tightness should have been alleviated by a 32% rise in tin concentrate imports, including a 27% increase from top supplier Myanmar. With Chinese tin demand also taking a lockdown hit last year, the strength of imports suggests a major restocking exercise into a falling price environment
Tin’s subsequent sharp price recovery will be a test of China’s continued hunger for imported units.
SHIFTING SURPLUS
However, China’s imports have already changed tin’s supply-demand landscape. At least part of last year’s surplus is now sitting in China. Shanghai Futures Exchange (ShFE) tin stocks have rebuilt from under 2,000 tonnes as recently as September to a current 6,843 tonnes, the highest since May 2021. Stocks registered with the LME, by contrast, have fallen from over 5,000 tonnes to 2,945 tonnes over the same timeframe.
LME time-spreads have slipped into contango this month, suggesting the availability of more metal in the non-exchange shadows. Physical premiums have also been easing, Fastmarkets assessing metal in Rotterdam at a mid-point of $1,000 per tonne over LME cash, compared with a 2021 peak of $1,750.
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