Quiet year for tin, gold shines
KUALA LUMPUR: The two metals traded in Malaysia, tin and gold, seem to have taken opposite directions this year – the former remained pretty quiet but attracted Chinese traders the most, while the latter thrived as it is often seen as a safe haven in times of crisis.
The world consumption for tin had fallen for the first time since 2015, and according to traders, the demand is expected to remain subdued in the short term, driven by falling output of consumer electronics amid a contracting global economy as result of the pandemic.
The Covid-19 outbreak has sparked a volatility in markets across the globe.
“The Covid-19 lockdown knocked out three of the world’s five largest tin producers outside of China.
“Peru’s Minsur, Bolivia’s EM Vinto and Malaysia Smelting Corporation accounted for a cumulative 55,400 tonnes of production last year, representing 17 per cent of global output,” a trader said.
Nevertheless, he said that China remained as the number one buyer this year, followed by Japan and South Korea.
Demand for consumer electronics is closely tied to gross domestic growth and a “V-shaped” recovery to the global economy, which appears to be occurring in China. The tin market hit its lowest on May 15 at US$14,930 per tonne, influenced by the plunging world stock markets.
At the time, commodities from oil to metals plummeted on the increasing likelihood of a world recession that could potentially spill into the credit and lending markets.
In November, when economies reopened with vaccine-driven optimism and growing confidence in the US President-elect Joe Biden, the metal reached its peak at US$19,230 per tonne on Nov 30 and Dec 1.
On its outlook, the global tin demand is set to recover by 2021, with an expectation of availability of Covid-19 vaccines produced by Pfizer, Gilead Sciences, Moderna, et al – all of which will generally trigger the expansion of global economy.
The recovery of tin demand is also buoyed by several new applications that are set to grow rapidly over the outlook period.
Additionally, the roll-out of 5G networks is set to boost the telecommunications sector and the growing use of tin in the electronics industry in various products such as computers, mobile phones, tablets and other consumer electronic devices. The increase in demand for electric vehicles – which use tin in their lithium-ion batteries – will also contribute to the recovery.
This precious metal has been in the spotlight this year and has attracted a whole new breed of non-typical gold investors who view it as a very attractive alternative risk asset, not necessarily just as a “safe haven” hedge.
Axi chief global market strategist Stephen Innes said the gold exchange-traded fund (ETF) demand exploded this year and has helped gold rocket higher despite soft physical needs out of Asia.
“It also tends to exhibit a bullish tendency during the second half of the year, and a more pronounced seasonality trend and a seasonality bounce between Dec 1 and Jan 31,” he said.
The bullion’s price was at its lowest on Jan 2, 2020 at RM199.95 per gramme, and hit its peak on Aug 6, 2020 at RM277 per gramme.
On its outlook, Innes said just as the gold ETF attracted a lot of bullish attention when gold was on the way up, the ETF could attract a lot of bearish attention on the way down and could be a significant source of supply.