LONDON Tin prices will
improve in the medium to long term as a supply deficit is
expected this year, according to industry analysts.
"Though the price of tin could
be volatile in the short term, medium- and longer-term
fundamentals remain strong for continued improved prices, with
every prospect of a supply deficit this year," analysts at
Australian financial services company Hartleys Ltd. said in a
note Feb. 11.
"Market commentary on tin demand
highlights some improvement as solder use picks up, driven by
increased consumption (by the) electronics and home appliances
solder end-use market," they added.
Tin was the best-performing base
metal in terms of price in 2012, the analysts said, rising
about 24 percent from $18,950 per tonne at the end of 2011 to a
final price of $23,500 per tonne at the end of 2012.
Tin prices have continued to
rise this year, having broken through $25,000 per tonne more
than once this year.
"Ongoing tin supply constraints
imply the tin price will further strengthen, especially in the
medium to longer term," the Hartleys analysts said.
"Tin is rated (on a four-year
outlook) to be the second-best-performing metal behind
palladium, and remains BNP Paribas favorite base metal,"
Supply will tighten this year,
the analysts said, as leading tin producers in China and
Indonesia have cut back their output due to the rising cost of
In Indonesia, tin operations are
mainly offshore, they said, and are becoming more expensive
because of fuel costs, while Chinas mines are generally
low-grade and underground, with a production level of about
100,000 tonnes per year for the past 10 years.
"China also has an increasing
gap between refined tin and mine output, being net importers,"
the analysts said.
"Supply from Central Africa
(including the Democratic Republic of Congo) is also under
pressure to comply with international standardsi.e., (to)
remove conflict tin from the marketwhich means supply to
some large smelters (will be diminished)," the note
New investment is now required
in mining projects to meet increasing demand and cover the
predicted decline in supply, the analysts said.
However, the quality of some
existing tin projects is suspect, the analysts added, as some
are not compliant with Joint Ore Reserves Committee codes or
are in high-sovereign-risk countries, while others have
processing issues and are in need of other metals in order to
"The tin market is small but
growing, currently about 350,000 tonnes per year, or about $10
billion," the analysts said. "Market growth is expected to come
from electronicssolder use, (the move) toward totally
lead-free solder, which means tin solder moves from 70 percent
to 100 percent of the market, which is forecast to add demand
for another 20,000 tonnes per year."
New markets are also emerging
for tin in the development of long-life batteries, as the metal
can boost battery life, as well as in stainless steel, where
tin can replace a small amount of chromium without compromising
strength, which brings costs down.
Tin also has uses in fuel
catalysts, as some tin alloys are able to improve fuel economy
with fewer emissions, the analysts added.
Leading tin refiners are likely
to look to secure new sources of supply, as some of the largest
producers of refined metal either have no mining assets at all
or assets with very short mine lives. End-users are also moving
downstream to secure supply, the analysts said.
A version of this article was first published by AMM sister
publication Metal Bulletin.