[SMM Analysis] Operating Rates of Smelters in Yunnan and Jiangxi Continue to Decline, with Supply Continuously Shrinking in Myanmar

According to the processing data obtained through in-depth market surveys by SMM, as of Friday this week, the operating rates of refined tin smelters in Yunnan and Jiangxi, two major tin-producing provinces, remained at a low level, with a combined operating rate of 53.86%. The operating rate of smelters in Yunnan continued to decline from the previous week and was nearly 10 percentage points lower than at the beginning of the year. The treatment charges (TCs) for tin concentrates with a 40% grade remained at historically low levels, approaching the cost line of smelters and severely squeezing profit margins. Some smelters have halted production for maintenance, while others have begun to implement production cuts in stages to address the current shortage of raw material supply. During the same period, the operating rate of smelters in Jiangxi was only 40.19%, consistently lower than that in Yunnan and down by approximately 15 percentage points from the beginning of the year. Some enterprises have been forced to reduce production for extended periods due to insufficient scrap supply, and some capacity may be permanently withdrawn. The reduction in scrap sources and the dual squeeze on costs have led to an increase in production costs for enterprises. The rising cost of scrap recycling, coupled with the decline in TCs for tin concentrates, has eroded the profits of secondary tin smelting. According to sources, relevant Thai authorities have decided to suspend the transportation of tin ore from Myanmar to Thailand starting from June 4. SMM understands that approximately 500-1,000 mt (metal content) of tin ore is transported from southern Myanmar to Thailand each month for redistribution into China. The Thai authorities' ban is expected to affect the transportation of tin ore from southern Myanmar in June. Moreover, due to the ongoing chaos in some regions within Myanmar, the normal transportation of tin ore cannot be guaranteed. Therefore, tin ore from southern Myanmar cannot be transported through internal Myanmar routes. In summary, it is anticipated that China's tin ore imports will decrease by 500-1,000 mt (metal content) in June, placing greater pressure on the domestic smelting sector.