Modern Mining August 2022

COMMODITIES OUTLOOK

Tin rocket back on Earth, but for how long? By James Willoughby: market analyst for the International Tin Association Financial commentary is full of analogies, one of the favourites being a roller coaster. Over the past two years, however, the tin market has been more akin to a space flight.

James Willoughby International Tin Association.

T he tin market took off like a rocket in 2020. After an initial dip at the start of the pandemic, prices quickly rebounded and didn’t look back for quite some time. The white metal ended 2021 up 88% as pandemic-related trends saw demand for consumer electronics jump massively. At nearly $40,000/tonne – more than double the average over the past decade – many thought this was the apogee of the tin spaceflight.

In the middle of February, Russia invaded Ukraine. In response, the EU banned imports of most com modities from March. Most Russian tin concentrate is sold into Asia, and any domestically produced metal is consumed or sold to former Soviet nations. Despite the lack of a direct impact on tin, the indirect impacts have been significant. Inflation, beginning in Europe but spreading to the US and parts of Asia, has muted demand for the metal with consumers preferring food on the table rather than the latest gadgets. Poor macroeconomic data has also moved speculators to withdraw from markets. Due to the small size of the tin market, this caused dramatic swings in prices: speculators took profits at the early March record levels; in the two days after, the LME benchmark lost over 14% of its value. The downwards move saw tin begin to re-enter Earth’s atmosphere. With China acting as a stabiliser, the surplus in the rest of the world was manageable for a while. China typically produces enough refined tin to meet its domestic demand but struggled to do so during the first half of the year. Due to high concentrate prices and low treatment charges, smelters refused to increase their output, fearing further falls in the price. Consumers had to look offshore for metal, sucking in any surplus. However, as major cities in the country locked down to prevent the spread of Covid once again, tin demand fell sharply. With no outlet for surplus material, global vis ible stockpiles of tin have steadily risen over recent months. Warehouse stocks measured over 7,600 tonnes in early July, more than double levels seen at the start of the year. Tin prices are now trading around $25,000/tonne mark, half the 2022 high and down nearly 37% year-to-date. Tin’s re-entry has been rapid. The question now is whether tin will be able to slow its descent and – like a SpaceX rocket – land safely. The summer months are typically quieter for tin demand. Downstream companies have reportedly taken the opportunity to reassess and restock, tak ing advantage of the lower prices. However, tin is always stronger at the end of the year: the usual

With the world seemingly returning to normal, demand growth was forecast to slow slightly in 2022 before returning to baseline rates in 2023. A gentle return to Earth for the tin rocket was scheduled. However, things did not quite go to plan. Changing regulations in Indonesia – the world’s largest exporter of tin – at the turn of the year saw the market continue its trajec tory. Prices on the London Metals Exchange hit $50,050/tonne in early

March, a new record. However, like most rockets, the tin market even tually ran out of fuel.

Tin ingots stock up as global demand is constrained by macroeconomics.

10  MODERN MINING  August 2022