Soaring tin prices see limited upward room on weak demand

SHANGHAI, May 29 (SMM) – While the recent tin price rally highlighted a tighter tin ore supply from Myanmar, an SMM survey suggested that the upward room for tin prices is limited due to lukewarm downstream demand and high inventory.

The SHFE 1809 tin contract broke its trading range over the past two months and jumped nearly 1.4% to close at 150,490 yuan/mt during the night trading session on Monday May 28. It soared to a high of 154,960 yuan/mt in the afternoon on Tuesday May 29.

However, downstream consumption for tin has slowed down in recent years, especially from the start of this year.

Demand from industries of tin plate, chemicals, and lead-acid battery lacks support in recent years due to overcapacity, environmental issues, and challenge from the new energy space, respectively. Electronics and the semiconductor industry, which includes the production of smartphones, tablets, and computers, account for the majority of tin demand.  

While China’s tin ore imports fell over 60% year on year in March to 2,000 mt in metal content, output in Wa State of Myanmar was affected by local spring festival.

In fact, China’s imports of tin ore from January to March amounted to 72,000 mt in physical content, up 19.3% from the same period last year.

The import volume in April has yet to be announced by China’s Customs, but SMM expects the imports to rebound to over 4,000 mt in metal content in April. May is also likely to see a rise in volume. 

Despite tight supply of high-grade tin ore, there has been no sign that Chinese domestic smelters would suspend production on a large scale, given the profits of tin by-products and the high cost of a shutdown, SMM learned.

Tin ingot inventory in the domestic market is expected at a high level of 15,000 mt as of Tuesday May 29, according to SHFE data and SMM’s calculation.

China’s output of refined tin in May is likely to stand at 14,000 mt, flat from April’s level but 7.1% higher than that in March, SMM data showed. A rise in domestic tin ore output is also likely to fill the gap of import drop in March.

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