[SMM Analysis] Stripping Away Macro Noise: Analysis of the Substantive Impact of Peru's Emergency Decree on Tin Supply

On May 11, 2026, the Peruvian government issued Emergency Decree No. 003-2026 in response to the energy crisis, triggering widespread market concerns over non-ferrous metal supply. However, through an in-depth analysis of the underlying energy consumption structure of the tin industry and Peru's domestic supply landscape, we believe that the decree has a negligible actual impact on global tin ingot supply. Current market anxiety largely stems from a linear extrapolation of broader base metal logic. This article aims to strip away macro noise and restore the true operating logic of the tin industry.

I. The Nature of the Energy Crisis and Its Relevance to Tin Smelting

The core of the current Peruvian crisis is a "gas shortage" triggered by a natural gas pipeline rupture, which could potentially lead to power shortages. The market's concern over mining sector disruption is premised on "high energy consumption."

However, from the perspective of tin's physicochemical properties and smelting processes, tin is not a high-energy-consuming metal:

• Short process flow: Tin smelting primarily employs Ausmelt and similar smelting processes to reduce tin concentrates into crude tin. Although this process requires high temperatures, the electricity consumption per mt of tin is far lower than that of aluminum or blister copper smelting.

• Low share in cost structure: In the production cost of tin ingots, raw materials (tin concentrates) typically account for over 80%, while energy (electricity, heavy oil/coal) costs represent an extremely low share. Even in the face of power rationing or short-term price increases, the marginal impact on the overall production cost of tin ingots is virtually negligible.

II. Peru's Domestic Tin Industry Landscape:

Minsur — Peru's sole tin producer and the world's second-largest tin company:

• Proprietary clean energy advantage: Minsur's San Rafael mine and Pisco smelter rely heavily on proprietary hydropower stations in Peru's Andes Mountains for their electricity supply. Peru's natural gas crisis primarily affects industries and residential users dependent on natural gas, with limited impact on mine sites powered mainly by hydropower.

• Scale: In 2025, Peru's tin concentrates production was approximately 33,800 mt, accounting for around 10% of global total production.

• Policy orientation: The government's emergency decree primarily focuses on safeguarding the nation's energy lifeline (such as Petroperú's operations), rather than directly intervening in the supply-demand balance of metals.

III. Where Are the Real "Pain Points" in Global Tin Supply?

Rather than focusing on Peru's natural gas pipeline, attention should be directed toward the real bottlenecks constraining global tin supply:

1. Production halt in Myanmar's Wa State: Production resumptions in the Wa State region have been slow, and Myanmar's rainy season is currently approaching.

2. Indonesia's Seasonal Disruptions: Indonesia's rainy season and RKAB (mining and production quota) policies cause periodic disruptions to global tin ingot exports every year.

These are the core variables determining future tin price trends, while Peru's energy crisis plays a negligible role among them.

IV. Conclusions and Investment Recommendations

Based on the above analysis, we conclude:The Peru energy crisis bill has negligible actual impact on tin ingot supply, and current concerns represent an overreaction by the market.

• Supply Side: Peru's tin ingot supply will remain highly stable. The global tin ingot supply bottleneck continues to lie in Myanmar, Indonesia, and other regions, rather than Peru's natural gas pipelines.

• Price Side: Tin prices will not experience substantive fundamentals-driven increases due to Peru's energy crisis. In the short term, tin price fluctuations are more driven by macro sentiment, rallies in other metals (such as copper and silver), or sentiment-driven speculation by funds exploiting the "Peru crisis" narrative.

• Strategy Recommendations: We recommend that investors, when monitoring tin price trends, filter out the noise from Peru's energy crisis and return to fundamentals. Key areas to watch include production resumption expectations in Myanmar's Wa State, Indonesia's export policies, and marginal changes in downstream electronic solder demand.