Tin has certainly maintained it’s price this year, rising strongly in response to Indonesia’s export controls of last August, the price has generally stayed above $23,000 per ton for much of the year.
The World Bureau of Metal Statistics’ recent monthly bulletin reported that the tin market recorded a narrow deficit of 300 tons during the January to March period with total reported stocks falling 800 tons during January and ended the quarter down 1,100 tons from December 2013.
The stock drawdown appears to be a result of the regulations, as tin supplies from Indonesia, the world’s largest exporter, have been hit as they force all tin ingot shipments to comply with higher purity rules and to first trade via the Indonesia’s Commodities & Derivatives exchange before being exported.
In February, PT Timah (JK:TINS) told Reuters it expects exports to drop 35% this year as a result. Timah is (understandably as a producer) much more bullish about likely shortfalls in supply and the consequences for prices, compared to the median deficit of 3,000 tons for 2014 predicted by a group of seven analysts for Reuters. Timah is predicting the supply deficit will be 20,000 tons.
According to an article in Australian publication Specialty Metals, one drag on the tin price in recent years has been the technology sector. Miniaturization has contributed to slack demand in recent years. Indeed, there was negative growth last year of -2% from the technology sector.
That is in the process of changing. Peter Kettle of ITRI says growth could be 4% this year and 6% next. In theory, a combination of rising demand and tightening supply should boost prices higher and, no surprise, that is what producers are predicting but there are several new mines likely to come online in the second half of the decade that should increase supply.
Whether they will arrive in time to maintain adequate supply later this year and next is unlikely. 2016 Or later appears more likely. Investors, though, do not seem convinced. Money isn’t flooding into speculative long positions on futures exchanges and while new mining ventures are putting funding together, there isn’t a queue of investors lining up for them to the extent there would be if prices were north of $30,000/ton.
Consumers, therefore, probably do not have to worry just yet. The market is tightening but so far prices have not really reacted, suggesting much may have been priced in already.
by Stuart Burns