The price center of tin is shifting upward [Wenhua Observation]

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

Recently, the geopolitical situation in the eastern part of the DRC has deteriorated sharply, becoming a significant driver behind the surge in tin prices. The Bisie mine, located in North Kivu Province of the DRC and operated by Alphamin Resources, is the world's third-largest tin mine. Its 2024 production reached 17,300 mt, accounting for approximately 6% of global tin mine supply and over 80% of the DRC's total tin mine production. The production stability of the Bisie tin mine has been repeatedly affected by the domestic armed rebel group "M23." In March 2025, due to armed conflicts approaching the mining area, the Bisie tin mine was temporarily shut down and gradually resumed operations in mid-April. Since November, the security situation in eastern DRC has deteriorated again, with fighting approaching the Bisie mining area, putting Alphamin at risk of a second shutdown. The Chinese embassy in the DRC urgently issued a reminder, demanding that Chinese citizens and enterprises immediately evacuate the high-risk eastern provinces. On December 4, although DRC President Tshisekedi and Rwandan President Kagame signed a peace agreement in Washington, practical constraints such as the incomplete disarmament of armed groups and disputes over mineral resource benefit distribution limit the agreement's effectiveness. Moreover, clashes between DRC government forces and the "M23 movement" have not ceased after the signing. Although the Bisie mine has not currently halted production, 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. Governors and traditional leaders from the northern states 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 at the Wa State tin mine in Myanmar continues to fall short of expectations. The production resumption plan initiated in April 2025 has been hampered by factors such as the rainy season, licensing costs, and equipment debugging, resulting 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, and even though import volumes rebounded somewhat in October, it failed to alleviate the raw material pressure on domestic smelters.

Data Source: General Administration of Customs

The low inventory pattern in the tin market provided a significant boost to the price increase. The latest LME tin inventory was 3,695 mt, at a medium-low level compared to the same period in previous years. Domestic social inventory of tin ingots decreased significantly YoY, with the 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 for SHFE tin surged from just over 50,000 lots to 120,000 lots, an increase of more than 100%. Coupled with the macro tailwinds from the US Fed's interest rate cut and the valuation transmission within the non-ferrous metals sector driven by copper prices hitting new highs, this further amplified the upward elasticity of tin prices, pushing them to break through key resistance levels and continue rising.

Data Source: London Metal Exchange

Demand side, the tin market currently shows a divergent pattern of "support from emerging demand and weakness in traditional demand." On one hand, emerging demand driven by AI computing power expansion and the new energy transition 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 like 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 an export rush and domestic subsidies, but a noticeable slowdown occurred in H2. Feedback from downstream enterprises indicated a significant downward trend in current order intake, alongside a slowdown in inventory turnover efficiency. Most enterprises, adopting a cautious stance towards high prices, did not engage in large-scale stockpiling, and end-users exhibited a strong wait-and-see sentiment. Consumption this year slightly decreased compared to previous years. Overall, while there is marginal support from emerging sectors, it is not enough to effectively counterbalance the consumption decline in traditional sectors in the short term.

In summary, successive supply issues have disturbed the tin market this year, with the overall trend of visible inventory both domestically and overseas declining, pushing tin prices continuously higher. However, the tin market overall presents a situation where "price increases are mainly driven by supply concerns, while actual demand support is insufficient." The current supply-demand pattern is a tight balance, without a significant supply gap having emerged. Given the absence of a clear shift in the tin industry's fundamental supply-demand pattern, the significant price fluctuations are more dominated by capital participation. Caution is warranted against the risk of substantial price fluctuations should capital exit upon signals of marginal improvement on the supply side.

(Wenhua Composite)