Home > Market change > Price of tin hits highest level in two years

Price of tin hits highest level in two years

July 27, 2010

“Falling supplies and rising demand from manufacturers in Europe and Asia are pushing tin prices to their highest levels in two years.

The price of the metal, a raw material in soldering and food packaging, has doubled since early 2009 and analysts believe it will soon rise above a key $20,000 a tonne barrier because of falling production in Indonesia, the world’s largest supplier, and strong demand from the manufacturing industry in Japan, South Korea and Europe.

The Sucden brokerage says: ‘It is hard to escape the conclusion that the tin market is tightening quite considerably and may continue to do so in 2011.’ The cost of tin rose nearly 9 per cent last week and on Tuesday it gained 2.5 per cent to $19,670 a tonne at the London Metal Exchange, the highest price in two years.”

Source: Financial Times, July 26, 2010

Observations:

  • Shortage of tin is expected as demand is increasing and no major new production is scheduled to start in the next year.
  • Over two-thirds of both production and demand of tin are in China and Indonesia. However, as national production in China does not keep up with demand, international trade is picking up.
  • The leading tin producing companies are Yannan Tin (China), PT Timah (Indonesia), Malaysian Smelting Corp. and MinSur (Peru)

Implications:

  • None of the diversified international mining houses is active in tin production (as core product). Diversification into this space is unlikely, as tin mining methods are very specific. As efficiency gains could be achieved versus the incumbents, junior niche players are likely to enter the base metal market.
  • Peru, Brazil and Bolivia have significant tin reserves, providing a potential for a surge of the tin market in Latin America. Solder, packaging and chemical applications would be the most likely demand source for the market.

©2010 | Wilfred Visser | thebusinessofmining.com

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