Concerns Over Ore Supply Tightness Highlight Supply Fragility, Tin Prices Continue to Shift Upward [Wenhua Observation]

Recently, tin prices have started a continuous upward trend, with the most-traded SHFE tin contract breaking through the 330,000 yuan mark, hitting a new high since March 2022, and market bullish sentiment is strong. This round of price increases is not driven by a single factor, but rather the result of multiple forces intertwining, including escalating geopolitical conflicts, unresolved supply bottlenecks at the mine end, support from low inventories, and boosted capital sentiment.

Recently, the geopolitical situation in eastern DRC has deteriorated sharply, becoming a major driver behind the surge in tin prices. The Bisie mine, located in North Kivu Province of DRC, is the world's third-largest tin mine (operated by Alphamin Resources). Its 2024 production reached 17,300 mt, accounting for approximately 6% of global tin mine supply and over 80% of DRC's total tin mine production. The production stability of the Bisie tin mine has been affected multiple times by the domestic armed rebel group "M23". In March 2025, due to armed conflict approaching the mining area, the Bisie tin mine was once suspended, later gradually resuming operations in mid-April. Since November, the security situation in eastern DRC has deteriorated again, with fighting approaching the Bisie mine area, putting Alphamin at risk of a second production suspension. The Chinese embassy in DRC urgently issued reminders, requiring Chinese citizens and enterprises to immediately evacuate the high-risk eastern provinces. On December 4, although DRC President Tshisekedi and Rwandan President Kagame signed a peace agreement in Washington, factors such as incomplete disarmament of armed groups and disputes over mineral resource benefit distribution limited the agreement's actual binding force. Furthermore, clashes between DRC government forces and the "M23 movement" did not cease after the agreement was signed. Although the Bisie mine is not currently suspended, the large-scale evacuation of nationals has heightened market expectations of a supply chain disruption.

At the same time, Nigeria also faces risks of tin supply disruptions. According to Xinhua News Agency, Nigerian President Tinubu declared a national state of security emergency on November 26. State governors and traditional leaders from northern Nigeria held a joint meeting on December 1, proposing a comprehensive six-month suspension of mining activities in the region. It is reported that Nigeria's annual tin metal production is about 7,000 mt, accounting for 2.3% of global mined tin supply. However, based on current feedback from various parties, the implementation of this mining suspension proposal faces significant resistance.

In addition to sudden geopolitical conflicts, long-standing supply bottlenecks at the mine end have laid the foundation for this tin price increase. On one hand, the production resumption process of the Wa State tin mine in Myanmar continues to fall short of expectations. The production resumption plan initiated in April 2025, hampered by factors such as the rainy season, licensing costs, and equipment commissioning, has resulted in actual ore output being far below market expectations. China's imports of tin ore physical content from Myanmar remained low in the first three quarters. Even though import volume rebounded somewhat in October, it did not alleviate the raw material pressure on domestic smelters.

Data source: General Administration of Customs

The low inventory pattern in the tin market provided an important "booster" for the price increase. The latest LME tin inventory was 3,695 mt, at a medium-low level for the same period in previous years. Domestic social inventory of tin ingots dropped significantly YoY, with combined domestic and overseas visible inventory around 10,000 mt, lower than the levels in the same period over the past two years. Given that global tin inventory is at a historical low, the rigid gap on the supply side will amplify price elasticity. Meanwhile, capital attention on the tin market increased significantly. Since Q4, the weighted open interest of SHFE tin surged from over 50,000 lots to 120,000 lots, an increase of more than 100%. Combined with the macro tailwinds from the US Fed's interest rate cut and the valuation transmission from copper prices hitting new highs in the non-ferrous sector, this further amplified the upward elasticity of tin prices, pushing prices to break through key resistance levels and rise continuously.

Data source: London Metal Exchange

Demand side, the current tin market shows a divergent pattern of "new demand support, traditional demand weakness". On one hand, emerging demand driven by AI computing power expansion and new energy transformation continued to be released. Global semiconductor sales maintained a YoY growth rate of over 20% in Q3, NEV production maintained a high growth rate, and tin demand for products such as high-performance solder and ultra-thin copper foil steadily increased, providing fundamental support for tin prices. On the other hand, demand in traditional consumption areas such as consumer electronics and home appliances remained weak. In H1, domestic home appliance production and sales saw strong growth driven by the export rush and domestic subsidies, but a significant slowdown was evident in H2. Feedback from downstream enterprises indicated a significant downward trend in current order intake, with inventory turnover efficiency slowing down simultaneously. Most enterprises, cautious about high prices, did not engage in large-scale stockpiling, and end-users showed strong wait-and-see sentiment. Consumption this year slightly declined compared to previous years. Overall, although there is marginal boost from new sectors, it is difficult to form effective support in the short term and is not enough to fill the gap caused by the consumption decline in traditional sectors.

In summary, since the beginning of this year, continuous supply issues have disrupted the tin market, and the overall trend of visible inventory both domestically and overseas has been downward, pushing tin prices higher. However, the tin market overall presents a situation of "supply concerns dominate price increases, while actual demand support is insufficient". The current supply-demand pattern is a tight balance, with no obvious supply gap yet. Under the premise that no significant change in the tin industry's own supply-demand pattern has occurred, the significant price fluctuations are more dominated by capital participation. Once marginal improvement signals appear on the supply side, be cautious of the risk of significant price fluctuations after capital flight.

(Wenhua Composite)