But if it hopes to become a competitive commodity of choice, market participants have indicated that there is a need for price stability and steadiness in supply flows.
According to leading industry specialists who attended the 7th annual International Tin Association (ITA) investor day in London on November 23, energy and technology are set to drive tin demand in the years beyond 2025.
Yet the metal’s volatile price action and supply flows have cast a shadow over investment opportunities in recent months, since exports from Indonesia, the world’s second-largest tin producer, came to a halt in mid-October.
Research published by the Massachusetts Institute of Technology (MIT) and commissioned by Rio Tinto, however, indicates that tin’s primary application in soldering has propelled it to the top of the list of metals likely to be most affected by the demands of new technology.
And while solder demand is lagging in China, the world’s largest refined tin producer and consumer, global demand outside China remains positive.
Around 47% of tin is used in soldering, while its current alternative applications are 17% in chemicals, 14% in tinplate, 8% in batteries and 5% in alloys.
“We’re in the foothills of what’s to come, and tin has a lot of promise for the future in a lot of new markets. Tin has a very strong platform to work on,” ITA technology team leader Jeremy Pearce told delegates.
Price stability matters
Tin’s contracting price remains a key factor for global production, however, and with many key global producers vying for higher prices, the metal’s volatile price action and slow response to supply news have kept investors cautious.
“It seems the Indonesian supply crunch has failed to ignite a push above $20,000 per tonne in the LME [London Metal Exchange] tin price, and it looks to be going the other way. I think [the tin price] will need a huge investment to move it $5,000 per tonne either way,” a European tin trader told Fastmarkets.
Yet the ITA remains confident that tin’s three-month price will remain stable throughout 2019, telling delegates on Friday that the LME price could move closer to $22,000 per tonne by 2022.
On November 23, however, tin’s LME price fell by more than 3%, dropping by $670 per tonne while the metal traded its highest daily volume since May 29 at 912 lots.
“Forced selling seems to have created a price below what the fundamentals might suggest, and despite funds liquidating amid low liquidity conditions, I remain bullish on the tin price,” Fastmarkets analyst Boris Mikanikrezai said.
Tin supply tells a different story
Away from prices, however, tin’s supply picture remains increasingly opaque, and this lack of clarity could impede the metal’s ability to overtake lithium, cobalt, nickel and copper in the technology space.
Underscoring this, the tin market remains subject to a high quantity of “invisible stocks,” which far outnumber the metal’s on-exchange stock count of 11,596 tonnes.
The ITA estimates that around 15,000-30,000 tonnes of material sits off-exchange in China, a figure further obscured by the absence of Chinese trade data for much of 2018, as well as the country’s capacity to shift the global tin market because it is both the world’s largest producer and consumer of the metal.
“China is rich and can afford to keep stock, and it is buying concentrates and smelting them as it wishes,” a tin trader told Fastmarkets.
“That process is costing them $6,000-7,000 per tonne, not to mention they’ve got the domestic tin market, and that’s churning away nicely,” the trader added. “I don’t [foresee] China destocking any time soon.”
