At today's online live conference hosted by SMM, Wu Xiaofeng, an analyst at (SMM) Tin, SMM, delivered a keynote speech on "tin prices hitting new highs in short supply at home and abroad".
Worries about global supply shortages escalated and tin prices continued to hit record highs. After the collapse caused by the epidemic in 2020, tin prices rebounded strongly and continued to this day. Supply worries caused by 2020Q4 inventory decline and raw material shortages have supported tin prices to break through resistance levels one after another. at present, the outer disk has reached more than US $26000 / ton, and the Shanghai Stock Exchange has pushed nearly 190000 yuan / ton.
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In terms of the outer disk, from macro impact to fundamental impact, Lunxi showed a high negative correlation with the dollar in 2020, and the dollar fell all the way to support a strong rebound in Lunxi. However, the negative correlation has weakened since 2021, and the main factor supporting tin prices is the market pattern that supply exceeds demand. China's imports increased sharply in 2020, and production in some major overseas producing countries decreased due to the epidemic. LME tin inventory dropped sharply in the fourth quarter, accompanied by a rapid rise in spot water, and exceeded US $5000 / ton at one point during the Spring Festival. The main consumer areas are close to short positions, providing a rare bullish factor for bulls.
Analysis of supply and demand in tin market
On the domestic side, the shortage of raw materials, low inventory and consumption can support the domestic trend. Tin ore imports continue to decline in 2020. Due to epidemic factors, WA tin ore imports become uncertain, and the domestic tin ore shortage is aggravated. The social inventory of refined tin in China continued to decline from the beginning of 2020 to the third quarter. Although the removal rate of refined tin has slowed recently, the quantity of 6000-7000 tons is still on the low side compared with the peak of 15000 tons.
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At present, the supply of domestic tin ore is stable as a whole. Affected by the policy of environmental protection and resource integration, the overall supply of domestic tin ore has stabilized in recent years, and a large number of future supply is unlikely to increase, so we should pay attention to the resumption of production in Yinman Mining Industry. In terms of imported minerals, Myanmar's mineral imports continued to decline, and tin processing fees were suppressed. Affected by the climate and epidemic situation in Myanmar, there is a shortage of supply at the mine end. According to the data, the total import volume of tin mines in 2020 was 158000 tons, equivalent to about 42000 tons of metal, a cumulative decrease of 11.3 percent over the same period last year. Imported tin mines account for about 30 per cent of the total domestic mineral supply, of which Myanmar mines account for 95 per cent of imports, and shipments of Myanmar mines are very important to the domestic raw material market.
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In terms of refined tin production, China's refined tin output increased instead of falling in 2020. Affected by the annual decline in tin imports, refined tin production decreased continuously from 2018 to 2019, but increased instead of falling in 2020. The main reason for the increase in output is that the steady rise in tin prices has increased the production enthusiasm of smelters, and the commissioning of Yunxi new plant has also increased production capacity and output. In 2020, China produced 157500 tons of refined tin, an increase of 7.0 per cent over the same period last year. Under the tight tin resources and low processing fees, most smelters still maintain production, some smelters switch to more recycled raw materials, and a small number of smelters cut production or suspend production.
In terms of import and export data, refined tin was imported in large quantities in 2020, and the export window has been opened recently. Since December 2019, the import window has shown signs of opening, showing more import profits from March 2020 until July, with monthly imports exceeding 1000 tons from October to November. Imports in 2020 totaled 17718 tons, an increase of 478.1 percent over the same period last year. With the rise of the outer disk before and after the Spring Festival, there is room for export profits, so we can pay attention to the export trends of related tin products. In terms of refined tin inventory, the removal of tin ingots has slowed down since October, and the output of fertilized tin and the amount of imported tin have both increased. The rate of removal of domestic tin ingots has slowed down since October, and there are about 6000-7000 tons in Shanghai and Guangdong.
At the refined tin consumption end, China's tin consumption accounted for about 49% of the world's total consumption in 2020, of which tin solder accounted for 63%, tin chemical industry accounted for 15%, and tinplate accounted for 7%. The downstream industry of 2020Q3 solder rebounded strongly, and the hot industry in 2021 is worth looking forward to. On the chemical side, the epidemic affects short-term export demand and will continue to grow in the future. At the end of the tinplate, the epidemic factors support the growth of demand, and the rise in the price of raw materials reduces the profits of enterprises. On the whole, China's tin market shows the characteristics of tight balance in 2020.
Future forecast: tin price may be high before and then low in 2021
Ledo: supply side: foreign tin ingot supply and domestic tin ore supply are difficult to grow rapidly, and the situation that supply falls short of demand will continue to support the trend of tin prices in the first quarter. Demand side: the consumption of the largest downstream tin solder industry is supported by semiconductor, photovoltaic, 5G and other industries, and the hot end market is generally expected to be good. With the promotion of the vaccine, the market demand in Europe and the United States began to recover, speeding up inventory consumption.
Negative: domestic: the strong rise in tin prices will promote the recovery of low-grade raw ore in Myanmar, and imports of tin ore are expected to increase in the late second quarter. On the demand side, with the control and improvement of the epidemic, the return of downstream orders may depress part of the demand. Abroad: with the rise in tin prices and the further improvement of the epidemic situation, the production of tin ingots in major producing countries such as Indonesia and Malaysia is expected to pick up.
Price forecast: domestic tin price 200000 yuan / ton can be expected! We should pay attention to the risk of tin price falling from the late second quarter to the second half of the year.
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