Analyst expect sharp growth of demand for tin in years to come

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By Eugene Gerden

Global prices for tin are steadily growing  and have already reached their  historical highs, being triggered by existing concerns of a new wave of the pandemic and associated with it new restrictions.

Currently tin futures on the London Metal Exchange (LME) are estimated at  US$36,400 per ton – a  new record for the metal for the last 10 years. Prices have risen by about 12% since the beginning of July and by almost 75% over the year. At present tin shows probably the best growth dynamics among the metals, traded on the LME.

Most of analysts expect a further price appreciation, as the demand for tin will be supported by the rapid development of global renewables’ sector and some major projects in the field of 5G.

In the meantime, additional pressure on prices is put by active distribution of some new coronavirus strains throughout the world, which are spreading faster than previously detected ones. That leads to a further closure of  borders, and disruptions of logistics, which, in turn, creates conditions for a shortage of tin in some regions of the world, in particular Southeast Asia, where the metal is actively used in the installation of integrated circuits.

During the pandemic, the demand for the metal skyrocketed along with the demand for consumer electronics. The growth of the demand could be also explained by the tightening competition between companies – producers of computer chips, which production usually requires the use of tin.

Another reason of a possible tin shortage is deterioration of the current situation with COVID-19 in some key tin-producing countries among which are Rwanda, Myanmar, Malaysia and Indonesia. The latter two have already limited the supply of the metal due to quarantine measures. The situation in Myanmar, the world’s third largest tin producer, remains also complex, which is mainly due to a recent change of power in the country and the arrival of military. Finally, production is expected to decrease by 25% at Chinese factories in Yunnan province.

In this regard, analysts expect further price increases since the demand will continue to significantly exceed the volume of supply, which has dropped to the lowest levels over the past 30 years. Analysts expect stabilization of the market no sooner than in 2022. That will be mainly due to the planned increase in production in China, Indonesia and other major producers, as well as Russia.

As for Russia, as part of its plans to significantly increase tin production in years to come, in order to meet at least domestic demand, which depends on imports by almost 90%.

This is confirmed by earlier statements, made by the Deputy Minister of Natural Resources and Environment, Head of the Federal Agency for Subsoil Use Yevgeny Kiselyov, according to which a particular attention will be paid for the increase of tin production in the Russian Arctic zone.

According to him, tin mining will soon begin in the Russian Yakutia Republic. In the area of ​​the Tirekhtyakh and Deputatsky rivers, with the planned annual output of approximately 6,000 tonnes of tin concentrate at the initial stage.

As part of these plans, the capacity of the mining and processing complex in the Chukotka Autonomous Okrug, will reach 14,300 tons of tin.

In general, Russia is currently in the top three countries in terms of proven tin reserves, most of which are concentrated in the Far East part of the country with the Pyrkakayskie Stockwork, being considered the largest tin field in Russia with the estimated reserves of 267,000 tons of tin and 18,400 tonnes of tungsten trioxide.

An increase of production in Russia and other major global tin producers will be supported by maintaining high prices for tin and planned lifting of the majority of epidemiological restrictions. In addition, transport costs should also decline, that will lead to stabilization of demand. As a result, prices may return in 2022 to the levels of the beginning of 2021, which varied in the range of US$23,000-25,000 ​​per ton.

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