Tin, an often overlooked industrial metal, has risen almost 50 per cent since the start of the year, making it one of the top performing commodities this year.
The price for the metal — used for soldering of electronics and lining steel cans — has experienced a roller-coaster ride over the past few years as supplies flowing from key producers have waxed and waned.
After falling to the lowest level since 2009 to $13,085 a tonne, in January, tin is trading at $21,400 a tonne.
The metal started its descent in 2014 after supplies from Myanmar flooded into the market. For much of 2015, tin prices hovered around a six-year low, prompting the largest smelters to pledge output cuts and ask Beijing to stockpile more tin. The market reversed its declines thanks to output falls in ore from producers such as Indonesia, Peru and China itself.
Prices have rallied as inventory levels have fallen. “Visible” stocks held in London Metal Exchange or Shanghai Future Exchange warehouses are at their lowest level since at least 2000, says the International Tin Research Institute, although it believes there is a “high level of under-reported stocks in China”.
The market has also seen a further boost from speculative activity in China.
“We have to bear in mind always that the money flows, the investment funds, can be the determining factor in any metals price,” Peter Kettle, markets manager at the ITRI, told its annual conference in Shanghai this week. Further stock drops could trigger a rise in prices “well above equilibrium level”, he said.
The level of investor activity has been highlighted by trading on the futures market in Shanghai. That also seems to have helped turn tin into the second-most actively traded metal on the LME this year.
At the conference, Li Gang, chairman of Yunnan Tin, the company that accounts for over one-quarter of global refined tin output, called for a “sustainable recovery” in the market, “rather than volatility caused by hot money or speculation in futures markets”.
The big concern for tin smelters is future supplies of ore. BMI Research is forecasting the global tin market will see a supply shortfall deepen to 9,400 tonnes in 2020. “This is mainly due to higher average tin consumption than production as a result of depleting ore reserves,” says the research group.
This year, Myanmar is projected to supply 50,000 tonnes or about 15 per cent of global ore supply, up from near-zero in 2012. One issue is ore quality, according to Cui Lin, ITRI analyst. She believes declining ore quality in the country’s mines indicates that artisanal mine supply from Myanmar has peaked. Any new shipments into China would have to come from more expensive underground mines.
Other new supply hails from at least 1,600 small mines in Congo that together account for about 4 per cent of the tin ore supply, according to shipments tracked by ITRI. Asian tin traders believe that Congo is actually supplying twice that amount to Asian smelters.
Other new mines in Bolivia and those under development in Central Asia and Russia could help offset ageing mines in China. High prices this year have boosted miners’ output, ITRI data shows.
Meanwhile, the downstream industry is worried that customers are moving away from tin and turning to substitutes. Tin got a boost 10 years ago when lead solder, used to fuse hard metals, was phased out of the electronics industry. Solder accounts for 44 per cent of tin consumption, down from 54 per cent in 2007.
Smaller electronic devices require only tiny droplets of solder, and the electronics industry is upgrading to highly conductive paste that uses even less tin. Nearly 30 per cent of Chinese smelter capacity sits idle today, a warning sign that high prices may not be matched by downstream demand.
http://ift.tt/2fvJeYy
Tidak ada komentar:
Posting Komentar