Electronic gadgets, batteries, alloys and soldering items are expected to become more expensive as tin prices soar

Products ranging from solder material, lead-acid batteries, smartphones, laptops, tablets and other electronics, and chemicals and alloys, including copper, are expected to become more expensive if they contain l ‘tin.

Manufacturers are expected to be under pressure as tin prices, which have risen by around 70 percent since the start of the year, hit an all-time high in the global market due to strong demand and a disrupted offer.

The prospect of a further increase by the end of the year does not bode well for either the industry or consumers.

Imbalance between supply and demand to keep tin prices firm until the end of the year

On Tuesday, spot tin prices on the London Metal Exchange (LME) were listed at $ 36,473 (₹ 27.05 lakh) per tonne, while 3-month contracts came in at $ 34,550 (25 , 62 lakh).

Supply disruptions

Tin prices have risen mainly due to supply disruptions resulting from the spread of the Delta coronavirus variant in Asia and Africa, in an already tight market.

More importantly, the pandemic has peaked in Myanmar, the world’s third largest producer, which is expected to worsen the supply-demand scenario. Supplies were also affected by the protests and strikes that followed after Myanmar’s defense forces staged a coup to displace an elected government.

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Drought and power cuts in China’s Yunnan Province, the Communist nation’s main metal producer, have also affected supplies.

The UK-based International Tin Association (ITA) said production in Yunnan was affected in June, while maintenance by the world’s largest producing company, Yunnan Tin, worsened the situation.

Maintenance work will be completed this month, yielding a significant volume to increase supplies. The ITA said tin production, especially in Myanmar, was affected in May due to a labor shortage.

Industry use

Labor movements between Yunnan and Myanmar continue, affecting production. But production will likely increase over the next few months, the ITA said.

Its study last year found that solder accounts for 49 percent of tin consumption, followed by chemicals (18 percent), tinplate (12 percent) and batteries (7 percent).

The ITA said the lean’s growth prospects were bright, especially for 5G-related markets, while canned foods were good as consumption increased during the pandemic. Likewise, battery usage has been increased, and a significant proportion of e-bikes in China use tin, he said.

Use of tin by application (in%)

Industry

Use

Solder

49

Chemical products

18

Tin

12

Battery

7

Alloys

5

Other

9

Source: International Tin Association

Perspectives raised

Fitch Solutions Country Risk and Industry Research (FSCRIR) has raised its projections for tin price movement this year to $ 28,000 per tonne from $ 23,000 earlier.

The agency said a rapid increase in demand has outstripped the slow resumption of tin supply during the Covid pandemic. He expects prices to peak only before the end of the year, which means they still have legs to rise further.

“We expected the limited supply growth to persist in the third quarter of this year,” he said, adding that as a result, world inventories of refined tin had declined.

Supply growth will be limited in the current quarter given the Covid closures in Indonesia and Malaysia affecting the reopening of mines and smelters. These two countries accounted for 30 percent of tin production last year, FSCRIR said.

Demand rationing

Prices will peak in the fourth quarter as only the supply tension will ease. The market will then decline, but the current record prices will lead to demand rationing from electronics manufacturers as they will struggle to pass the rise on to consumers, the agency said.

The easing of foreclosure restrictions will also boost exports, he added.

The current situation in the tin market is due to a persistent supply shortage in previous years, which is expected to continue until next year.

The supply will calm down once the tin production projects are launched, but not in the near future.

Currently, tin stocks on the LME stand at 2,290 tonnes, with warrants of 1,060 tonnes canceled. This means that 1,060 tonnes left the LME warehouse, possibly for cash sale. Inventories in the LME warehouse are 70% lower than in the previous year.

Shipping delays

According to the ITA, the world production of refined tin is 3.3 to 3.7 tonnes of lakh, with mining output of 2.7 to 3.1 tonnes of lakh. The rest is covered by secondary production or recycling of the tin.

This year, supplies tightened as exports from Indonesia, the world’s largest shipper and second-largest producer of metal, fell 24% in the first quarter, mainly due to shipping container shortages and other delays. . There were similar supply problems in China, the world’s largest producer, and Congo, supporting tin prices.

According to AfriTin Mining, which owns tin assets in Namibia and South Africa, the tin market has always faced a deficit and this is expected to continue until 2022. The deficit is mainly due to the increasing regulations in producing countries and depletion of ore reserves.


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