Tin prices may gain this year on supply concerns
Myanmar mine yet to resume operations despite lifting of ban, Indonesia exports face disruptions
Tin prices will likely rule at elevated levels this year on increasing worries over supplies after having come otwo-year highs a fortnight ago, say analysts.
The metal’s prices increased by 7 per cent in Q1 2024 (quarter-on-quarter) and strengthened further in April, partly reflecting continuing supply constraints in Myanmar and Indonesia, which account for 40 per cent of global production, said the World Bank in its Commodity Outlook.
“Spurred by speculative support, LME tin prices reached their highest point in almost two years on April 19, before falling back to $31,000 this week, with a 4 per cent drop on Tuesday,” said Tom Langston - Senior Market Intelligence Analyst, International Tin Association (ITA).
DELAY IN JAKARTA NOD
Research agency BMI, a unit of Fitch Solutions, said despite Myanmar lifting the ban at Man Maw mine in Wa province from January 4, operations were yet to resume.
“On the other hand, Indonesian tin exports have faced significant disruption in Q1 2024, with delays in approvals of mining companies’ annual work plans, known locally as RKAB, causing significant panic among market participants,” it said.
The World Bank Commodity Outlook said Myanmar introduced a 30 per cent in-kind tax in February on all grades of tin concentrate exports, following the closure of several mines last year for conservation and pollution-reduction reasons.
Reports of market tightness continue as demand sentiment appears to be picking up, particularly in the US, Langston said.
SHIFT IN INTEREST
Currently, three-month tin contracts on the London Metal Exchange (LME) are ruling at $30,603 a tonne, while prices in LME spot are quoted at $31,350-375.
The spread of LME 3month price over cash price remains in backwardation — when spot prices are higher than futures, Langston said.
Having hit a record high, the trend in tin’s speculative interest has shifted, further shortening for the second consecutive week due to long liquidation, the ITA Senior Market Intelligence Analyst said.
PRICE FORECAST
While prices seem to have eased slightly in the past week, BMI said it expects prices to ease over the coming months.
“Tin prices are projected to rise by 4 per cent (year-onyear) in both 2024 and 2025, balancing tight supply conditions and increased demand, particularly related to the production of semiconductors, photovoltaic panels, and other energy transition technologies,” the World Bank said.
“We have revised up our tin price forecast for 2024 from an annual average of $26,000/ tonne to $28,000/tonne, as supply woes in Q1 2024 drove up sentiment and prices.
Fastmarkets predicted that the LME tin price could reach $28,000–$29,000 before consolidating.
“Our price forecast for 2024 means we expect prices to hover around $26,000 to $32,000 over the coming months,” said BMI.
Langston said concerns over a squeeze on the LME have been widely reported, with one market participant holding a significant long position, according to the most recent data.
PROBLEMS IN CONGO
Although trading on the ICDX in Indonesia resumed on April 24, Indonesian exports are expected to decline in April to around 2,700 tonnes, he said.
Exports and output have been constrained in Indonesia by continuing licensing delays, the World Bank said.
The Trading Economics website said due to the Myanmar problem China made efforts to source tin ores from Congo but armed conflict in the African nation put paid to its hopes.
The developments coincided with a rise in demand, following a rebound in Chinese and US manufacturing activities and bullish longterm bets for the metal due to its soldering properties used in AI materials. This resulted in tin inventories at the LME dropping by 50 per cent this year to 3,670 tonnes.