Fitch: tin prices will remain high this year

Fitch said tin prices would continue to rise slightly in the coming years as demand "continues to be strong and increasingly exceeds supply".

However, in its Commodity Outlook report released in October, the (World Bank) of the World Bank predicted that commodity prices would fall slightly this year after a sharp rise last year. However, it agrees with Fitch that "demand continues to grow rapidly and global supply may be difficult to keep up with."

* production rebounded *

Market intelligence platform IndexBox supports Fitch's view that tin prices will not return to pre-epidemic levels due to high energy and resource costs.

The current rise in tin prices is due to the suspension of production and maintenance of a tin smelter in Guangxi since February 10. ITA said the smelter, with a capacity of 25000 tonnes, would be closed for 45 days, leaving 1200 tonnes of refined tin "unable to supply the Chinese tin market".

* demand rebounded *

The World Bank says the growth in the installation of electronics and photovoltaic equipment has significantly increased demand for tin.

Fitch said the main reason for demand growth outpacing supply growth was an increase in sales of medical, household and personal devices as a result of the COVID-19 epidemic. All these products are soldered with tin.

Fitch said: "the decline in global refined tin stocks has caused prices to continue to rise and put the market at a clear risk of price increases, especially during periods of power shortages in China."

In addition to medical and household equipment, tin is widely used in photovoltaic cells with the greening of the economy.

* revised price outlook *

The current bull market in tin has led Fitch Solutions to raise its price forecast for tin to $42000 a tonne this year from $32500 a tonne. Similarly, the outlook for next year has increased from $29000 to $38000.

Fitch said tin prices had been rising strongly since 2020 due to severe supply constraints caused by the blockade, particularly in Malaysia and Indonesia, where major tin producers together accounted for 30 per cent of global refined tin production in 2020. "although supply slows slowly, it still does not match demand," the agency said.

By August 2021, tin prices had risen for 16 consecutive months and fell slightly in September, according to the World Bank. It agrees with the Fitch solution that the blockade caused by the outbreak disrupted mine production in Indonesia and Malaysia.

IndexBox said rising demand in the electronics industry had led to tin shortages, while global tin production had stagnated over the past decade, pushing tin prices higher. "China's metal smelting restrictions caused by environmental restrictions have further pushed up tin prices," the company said. "

* fundamental mitigation *

Fitch said the fundamentals of the tin market were expected to ease slightly in 2022-2023, driven by increased supply. There are signs that this has happened.

Although 80 per cent of production by (MSC), a Malaysian smelter cut as a result of the blockade, has resumed production, encouraged by high prices, Indonesia's PT Timah is expected to eventually reverse its 2020 cuts this year.

On the demand side, record prices for refined tin will lead to a slowdown in demand growth.

IndBox said growing demand would boost investment in tin production and lead to lower prices.