Tin Prices Explained
Tin prices rebounded as Myanmar production uncertainty was lifted. This came after Leaders of the Wa State in the country authorized the resumption of partial mining activities in the region. Despite not including tin mining, the decree drove high expectations in the market. Thus, this new improvement from one of the top global suppliers revived tin prices.
Why are tin prices fluctuating?
1. Supply and Demand
The closure of mining in Myanmar after the military takeover affected the tin prices as the country accounts for 15% of the total global reserves. Thus, this affected China’s production which prompted the country to look for tin supplies from alternative sources, driving imports from the Democratic Republic of Congo to soar by 24%
Overall, the tin prices story is a reminder that commodities are vulnerable to the economic realities of supply and demand which can make or break prices.
2. Electronics Industry
The huge demand from the electronics industry played a crucial part in the soaring tin prices in 2023. This is due to the normalization of work-from-home set-up which boosts global computer demand and other electronic devices and accessories.
Additionally, the increasing demand for tin from the EV industries due to the electrification campaign made tin prices spike to another level. The electronics industry alone needs 50% tin for soldering metals. Thus, this huge demand can potentially drive its prices.
3. Reduced Global Tin Output
China’s tin production has consistently declined for the past 15 years due to tin reserves depletion. Furthermore, the country localized its metal reserves to combat inflation.
This is evident when the Shanghai Futures Exchange registered a 60% ( 8,745 tons ) increase in tin stocks in the first quarter of 2023 while the London Metal Exchange inventory has only 2,480 tons.
Additionally, Myanmar’s uncertain reopening of its tin mining hubs further complicates the supply chain. Furthermore, Peruvian and Bolivian quarries shut down their operations due to protests and a lack of coal to power production. Thus, these factors largely disrupt the tin supply pipeline which will have adverse effects on its prices.
Which variables impact the price of tin?
- Supply and Demand
- Electronics Industry
- Reduced Global Tin Output
- Chinese Supply and Demand
- Soldering Demand
- Government Policies
Where does tin come from?
Tin is a soft and silvery-white metal with a bluish tinge. Extracted metals from the Bronze Age proved that people in that era alloyed tin to their agricultural tools and weapons.
Due to its ductile and cold-working adaptability, tin makes a good material for a variety of applications:
1. Bronze – An alloy of copper and tin makes a stronger and more durable bronze. The process of using tin to make bronze dates back around 2,000 BC to 700 BC ( before Christ ).
2. Solder – Another use of tin is making solder, a low-melting-point alloy that is used to join metal parts together. Solder is popular in electronics, plumbing, and construction applications.
3. Tin Plating – When combined with iron, tin makes a good lead, zinc, and steel coating to prevent corrosion. This application is important in food and beverage preservation.
4. Bearing – Due to its low friction property, tin is also a good bearing material that is useful for cars, airplanes, and machinery such as wind turbines, and solar cells.
The manufacturing process of tin metal involves the following steps:
1. Mining – The most common tin ore is cassiterite which is a tin oxide mineral that is mined from underground.
2. Concentrating – To remove impurities, the tin ore is concentrated through crushing and separating the tin-bearing particles from the waste material.
3. Smelting – To produce tin metal, the concentrated ore is smelted by heating it in a furnace with carbon, which reduces the tin oxide to metallic tin.
4. Refining – The final step involves refining the tin metal by distillation, electrolysis, and liquefaction to remove the remaining impurities.
Today, this metallic element is present in our everyday routine, from the stacked canned goods in your cupboard or canned drinks in your fridge; to mobile communication, and transportation. Overall, we have China, Indonesia, Myanmar, Peru, and Bolivia to thank for.
What is the future price of tin?
While tin prices showed negative trends in the market due to the build-up of its supplies and a sluggish demand, the accelerating demand from the energy transition sector such as solar panels and electric vehicles will gradually support its prices in the coming years.
Additionally, the need from the all-important soldering sector shows signs of picking up. Furthermore, the uncertainty of Myanmar’s tin production adds offsetting factors to its surplus inventory. Thus, experts predicted a bullish tin market averaging $30,000 per ton in 2030.