2022 was a volatile year for the tin metal market, with prices experiencing one big fluctuation after another. In the first quarter, supported by low inventories and macroeconomic factors, tin prices rose all the way to historic highs. However, after the end of the LME nickel event, market panic eased and tin prices fell back from their highs. In the second half of the year, with the opening of the import window, imported tin increased significantly. Due to the impact of the pandemic on downstream demand and transportation issues, demand weakened sharply, leading to an oversupply situation and a sharp drop in tin prices. The downward trend continued until July, when it eased somewhat due to large-scale production shutdowns for maintenance at smelters. Afterwards, with the suppression of the rising US dollar index and the full resumption of production at smelters, tin returned to a supply-strong-demand-weak pattern and began a weak and volatile trend.
In 2022, spot premiums for tin in the physical market decreased significantly compared to 2021. The LME 0-3 month forward price remained in a contango state, but the contango premium narrowed significantly compared to 2021, especially in the second half of the year. The domestic spot market showed even more extreme price fluctuations.
Looking ahead to 2023, the supply-demand pattern is expected to remain weak in the short term, but may gradually improve in the second half of the year. On the supply side, the shortage of domestic tin ore resources will partially suppress refined tin output, while increased imports of tin ore from countries such as Myanmar will help fill the domestic supply gap. Indonesia’s PT Timah is expected to continue increasing production in 2023. In terms of demand and consumption, the rapid development of the automotive industry, especially new energy vehicles, is key to maintaining growth in tin consumption. The rapid development of the downstream photovoltaic industry will also drive an increase in tin consumption by about 20,000 tonnes.
In terms of inventories, considering that tin is perennially in short supply and that downstream demand is expected to gradually recover in 2023, it is expected that inventories will remain at low levels. However, due to uncertainties such as the pandemic and geopolitical risks, there are still many factors that could affect the future trend of tin prices.
(Source: Fangzheng Futures Research Institute Nonferrous and New Energy Metal Research Center)
Tin: Supply and Demand Both Weak, Fundamental Repair Needed
In the first quarter of 2022, supported by low inventories and macroeconomic factors, tin prices surged to historic highs, breaking through the RMB 395,000/tonne mark and the $50,000/tonne mark on the LME. However, after the end of the LME nickel event and the easing of market panic, tin prices fell back to normal levels. Strong consumption expectations helped to maintain high tin prices in China. With the opening of the import window, imported tin increased significantly. However, due to the impact of the pandemic on downstream demand and transportation issues, demand weakened sharply, leading to an oversupply situation. Tin prices plummeted until July, when they began to stabilize due to large-scale production shutdowns for maintenance at smelters.
Afterwards, with the suppression of the rising US dollar index and the full resumption of production at smelters, tin returned to a supply-strong-demand-weak pattern and began a weak and volatile trend. In 2022, as domestic and foreign tin inventories fluctuated and rebounded, spot premiums for tin also decreased significantly compared to 2021. The LME 0-3 month forward price remained in a contango state, but the contango premium narrowed significantly compared to 2021, especially in the second half of the year. Domestic spot premiums showed a characteristic of violent fluctuations, reaching a peak of RMB 17,500/tonne in May and a discount of RMB 2,500/tonne in March.
Looking ahead to 2023, the current supply and demand pattern is expected to remain weak in the short term, but may turn around in the second half of the year as demand improves. On the supply side, the shortage of domestic tin ore resources will partially suppress refined tin output, while increased imports of tin ore from countries such as Myanmar will help fill the domestic supply gap. Indonesia’s PT Timah is expected to continue increasing production in 2023. In terms of demand and consumption, the rapid development of the automotive industry, especially new energy vehicles, is key to maintaining growth in tin consumption. The rapid development of the downstream photovoltaic industry will also drive an increase in tin consumption by about 20,000 tonnes. In terms of inventories, considering that tin is perennially in short supply, tin inventories in 2023 are unlikely to increase significantly. Overall, with the continued pace of interest rate hikes by the Federal Reserve, tin prices are expected to continue their volatile trend in the short term, but are expected to rebound after that due to growth on the demand side. It is expected that Shanghai tin will trade in a range of RMB 150,000-220,000/tonne and LME tin will trade between $16,000-$30,000/tonne.
