Multiple Bullish Factors Bolster Tin Prices   

In August, tin prices remained firm above 260,000 yuan/mt, with no optimistic progress on the resumption of mining operations in Myanmar's Wa State, which continues to support tin prices. Currently, multiple positive factors suggest tin prices may challenge the 275,000 yuan/mt level again.

No Progress on Resumption of Tin Concentrates Production in Myanmar's Wa State

At present, there is no progress on the resumption of tin concentrates production in Myanmar's Wa State, leading to a continued decline in China's tin concentrates imports. According to China Customs data and Antaike's calculations, China imported 10,278 mt of tin concentrates (physical content) in July, equivalent to 4,568.4 mt of metal content, down 12.8% MoM and 15.3% YoY. By country, imports from African nations such as the DRC and Nigeria totaled 2,581.9 mt of metal content, down 20.5% MoM. Despite the resumption of tin concentrates production in Myanmar, imports fell instead of rising, with metal content dropping by over 300 mt, down 49.5% MoM. Imports from Australia were below 500 mt, down 14.6% MoM. From January to July, China imported a total of 231,000 mt of tin concentrates (physical content), equivalent to 31,000 mt of metal content, up 2.3% YoY.

Domestically, tin concentrates treatment charges (TC) in Yunnan and Jiangxi stood at 12,000 yuan/mt and 8,000 yuan/mt, respectively, as of August 17. The current TC levels are at their lowest in nearly three years, reflecting tight domestic tin ore supply and supporting the rise in tin prices.

Refined Tin Production

Antaike's survey of 18 domestic refined tin smelters (with smelting capacity exceeding 310,000 mt and a total capacity coverage rate of 98%) showed that refined tin production in July totaled 17,899 mt, up 3.3% MoM and 16.1% YoY. Despite the significant YoY growth in refined tin production, overall tin consumption performed well, effectively absorbing the supply.

Tin Solder Supports Consumption

The tin chemical sector accounts for about 20% of total refined tin consumption. Refined tin is a key raw material for PVC production, which is closely tied to the real estate sector. Latest real estate data show that from January to July, completed housing area totaled 250.34 million m², down 16.5%, with residential completions at 180.67 million m², down 17.3%. The mediocre performance of the real estate market weighs on PVC consumption but has limited positive impact on refined tin demand.

The tin solder sector accounts for about 40% of total refined tin consumption. Tin solder is widely used in electronic components for consumer electronics, computers, and automobiles. For electronic components, the gradual recovery of the semiconductor industry is expected to boost related consumption. In the automotive sector, the extension of the trade-in policy has supported strong market performance. From January to July, China's auto production and sales reached 18.235 million and 18.269 million units, up 12.7% and 12% YoY, respectively, with growth rates expanding by 0.2% and 0.6% compared to the first half of the year. Notably, NEVs continued to perform well, with production and sales totaling 8.232 million and 8.22 million units, up 39.2% and 38.5% YoY. Additionally, the booming PV industry has driven tin solder demand. In July, China's domestic PV module output reached 47.1 GW, up 0.45% YoY, remaining at a high level. The rapid growth of the new energy sector has boosted refined tin consumption.

On the demand side, tin chemical consumption remains mediocre, but tin solder consumption is strong. Given its larger share, overall refined tin consumption is currently moderate.

Inventory Levels

As of August 25, SHFE tin inventory stood at 7,032 mt, the lowest level for the same period in three years. The ongoing decline in inventory indicates a favorable supply-demand balance for tin.

Overseas inventory is also at low levels. As of August 22, LME tin inventory was 1,785 mt, hitting a new yearly low. The continued decline in LME tin inventory this year has further supported tin prices.

Macro Front

Recently, the US dollar index has fluctuated downward, benefiting tin prices. Since August, the index has declined to around 98. The likelihood of a US Fed rate cut in September has increased, which could further weaken the dollar. Fed Chairman Powell stated at the Jackson Hole symposium that current conditions suggest downside risks to US job growth, and shifting risk balances may warrant policy adjustments. Powell noted the Fed is open to rate cuts, acknowledging the economy's resilience amid high tariffs and tighter immigration policies but highlighting significant slowdowns in the labour market and growth. While inflation remains a concern, rising employment risks may prompt a September rate cut. He emphasized that economic outlooks and risk changes under tight policies may require policy adjustments. A Fed rate cut in September would be a significant positive for tin prices.

Conclusion

The difficulty in resuming tin concentrates production in Myanmar's Wa State continues to tighten tin ore supply, remaining a key support for tin prices. Low inventory levels also favor tin prices. If the Fed cuts rates in September, it would further boost tin prices. In the short term, tin prices may fluctuate upward toward the 275,000 yuan/mt level.

(Author: Guangzhou Financial Holdings Futures)

Please note that this news is sourced from https://www.cnmn.com.cn/ShowNews1.aspx?id=464603 and translated by SMM.