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The official cash price for tin on the London Metal Exchange fell by almost 12% in July, which was its steepest decline since August 2023 and made it the worst performer across the base metals complex. Fastmarkets analysts said that had led to sentiment toward tin turning negative, with hedge funds then piling in to acquire short positions.
The market has been largely buffered by sufficient consumer, producer and exchange inventories, along with the slower-than-expected turnaround in demand, which has shielded tin somewhat from coming under too much pressure from supply challenges.
And tin consumption is expected to pick up pace due to increased investments in electric vehicles (EVs) and solar panels as part of the energy transition trend, Fastmarkets understands.
“We are now pinning [our] hopes on rising installations of solar panels, because the traditional demand from electronics consumption is losing momentum,” a Singapore-based trader said, adding that sentiment is still bullish towards the metal in the long term.
Tin has been a foot soldier in the ongoing energy transition, with 10% of tin now used in generation of renewable energy, through its use a solar ribbon and glass coating in solar panels.
Its primary application, up to 49% of tin use, remains in its use as electronic solder for linking electrical components and in circuit boards, including those in mobile phones and electric cars. Yet a substantial portion of soldering is employed in semiconductor connections, according to the International Tin Association (ITA).
Semiconductor sales declined sharply through 2022 and into early 2023, but have bounced back since the second half of 2023. Mirroring this change, the tin price on the LME witnessed a similar downtrend in 2022, with its price sinking below $20,000 per tonne.
In May 2024, global semiconductor industry sales reached $49.1 billion, an increase of 19.3% compared with May 2023’s $41.2 billion and up 4.1% compared with April 2024’s $47.2 billion in sales, according to the latest report from the Semiconductor Industry Association (SIA).
“The artificial intelligence (AI) boom is another factor that will drive up tin demand over time, although the effect is not fully priced-in yet,” a source told Fastmarkets.
Alongside the demand expectations, however, tin has historically thin liquidity and limited availability, which means it is prone to price volatility. This has been particularly true this year, with the tin market facing both raw materials and refined metal supply challenges, due in large part to the export policies in leading producer Indonesia and in Myanmar.
Reflecting the metal’s growing importance and Asia’s key role in its production and consumption, Fastmarkets launched an FOB Singapore tin ingot premium on Tuesday, August 6.
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