GANZHOU, Nov 7 (SMM) – Shanghai tin prices are likely to return above 140,000 yuan/mt in the two months ahead, as tight ore availability and maintenance-caused production cut at China’s largest tin producer Yunnan Tin Group will lead to a sharp supply decline, said Li Ziyan, senior tin analyst at SMM.
Tin prices on the Shanghai Futures Exchange are expected to strengthen in the range of 140,000-150,000 yuan/mt in 2020, Li told delegates at 2019 SMM China Tin Summit in Ganzhou, Jiangxi province on Wednesday November 6, when the most active SHFE tin closed at 136,600 yuan/mt.
Following a decline in 2019, China’s production of refined tin is expected to recover next year, in anticipation of an increase in ore imports.
SMM data showed that Chinese smelters turned out 112,555 mt of refined tin in the first nine months of 2019, down 5.78% from the same period last year, due to tight ore supply, sharply lower processing fees and joint production cuts.
Domestic refined tin output is expected to amount to 143,200 mt for 2019, if smelters realise the production curtailment target of 20,200 mt.
According to SMM calculations based on customs data, China’s imports of tin ore decreased 28% year on year in January-August.
In terms of Sn content, the tin ore import decline came in at 18%, pointing to higher ore quality. China began to see steady inflows of Australian high-grade tin ore since the start of 2019, and resources that entered China through Yunnan’s Ruili and Menglian also had a high Sn content.
Production of tin ore in China, however, is expected to fall to 80,500 mt in 2020, from an 85,000 mt estimate for 2019. SMM data showed that domestic tin ore output dropped 7.23% year on year in the first nine months of this year.
On the demand side, domestic economic weakness and the protracted trade war with the US took a toll on refined tin consumption this year, which slipped 1.2% year on year in the first seven months of 2019.
China’s tin market will be in a supply deficit of 4,165 mt in 2019, if consumption remains stable in September-December.
Demand for tin is likely to pick up in 2020, as the world’s two largest economies seem to be inching closer to clinching a partial trade deal.