SHANGHAI, Jun 29 (SMM) - Looking back on tin prices as time goes to the midst of 2022, tin prices hit a record high of 395,000 yuan/mt in March, and then gave up the gains in May. Plummeting prices have prompted a number of tin smelters to overhaul. However, the multi-country interest rate hikes, led by Federal Reserve, brought about the expectation of a global recession, and downstream demand has not been significantly improved, with shorts performing aggressively. As of June 28 close, the most-traded SHFE tin has recorded a year-to-date (YTD) decline of 24.48%.

SMM 1# tin spot touched a record high of 368,500 yuan/mt on 9 March 2022 since SMM recording, and fell sharply in May. The spot prices set a YTD decline of 26.84% as of 28 June.

In terms of inventory, SHFE tin inventory posted large ups and downs, while LME tin inventory rose steadily. As of June 17, SHFE tin inventory stood at a high of 4,022 mt, while LME found its YTD high at 3,435 mt on June 27.

According to SMM analysis, although a number of smelters jointly reduced the production in 2022, the annual production is still expected to record a growth of 4.77%. Therefore, the supply side is still facing relatively large pressure. On the demand side, it is important to anchor the growth of the PV sector. And taking into account the overseas new energy infrastructure with heavy investment, the installed PV capacity in China is also worth of attention.

When we look into the supply side in more details, the raw material imports from Myanmar rose significantly in the first quarter, and rising TCs of tin concentrate also encouraged some domestic smelters to ramp up the production. Meanwhile, the import window remained open when domestic tin prices outperforming the overseas, which engaged a large number of importers. In this case, tin imports rose greatly in the second quarter. And domestic tin supply was relatively sufficient as a whole.

The demand side, on the other hand, has been dragged on by the pandemic, evidenced by the falling operating rates of solder companies due to less orders from electronics and home appliances sectors. In addition, the risk of a price correction is high as tin prices have been high for quite some time. Short-term oversupply has greatly rattled the nerves of market players, hence tin prices dropped palpably in May.

To sum up, domestic social inventory has started to fall as mainstream smelters are under intensive maintenance, though the process was slower than expected. Tin prices, after falling significantly, are expected to see intensive money game around the 200,000 yuan/mt mark. As such, SMM believes that tin prices are likely to fluctuate in a wide range amid poor supply and demand.