Analyst: Two Major Positive Factors May Further Support Tin Prices

Published on: May 17, 2024
Author: Amy Liu

An analyst stated that supply disruptions, ongoing geopolitical conflicts, inflow of funds due to rate cuts, and stable demand may further boost tin prices, which have soared to nearly a two-year high in recent months.

Driven by production issues in Myanmar, Indonesia, and the Democratic Republic of the Congo, the London Metal Exchange benchmark three-month tin price reached $36,050 per ton in April, with these countries accounting for 43% of global tin production by 2023, according to the U.S. Geological Survey.

With inflows of funds into the industry to hedge against inflation and hopes for rate cuts, tin prices have risen by 31% this year, outperforming other base metals. Tin has surpassed copper, a favorite among investors.

Regarding supply, Project Blue analyst Jack Anderson mentioned uncertainty about whether tin mining operations in Myanmar will resume as some analysts anticipate over the next six months. While Indonesia has resumed exports, it remains uncertain if producers in the country will increase exports to compensate for the lower volumes in the first two months of this year.

Guo Ning, Secretary-General of the China Nonferrous Metals Industry Association (CNIA), suggested that tin prices in the second half of the year might significantly increase, potentially reaching as high as $38,000 per ton, influenced by macroeconomic factors. Additionally, long-term export volumes from Indonesia may decline. China’s tin production in 2024 is forecasted to reach 216,000 tons with consumption estimated at 226,000 tons.

Project Blue also predicts that global tin demand will exceed supply this year.

BMI analysts raised their 2024 tin price forecast in a report released on Monday, May 13, but expect tin prices to possibly fall in the coming months to around $26,000 to $32,000 per ton, citing soaring inflation and a slowdown in semiconductor sales.

Taiwan Semiconductor Manufacturing Co, the world’s largest contract chipmaker, recently lowered expectations for the industry’s growth last month, surprising the market.

Exchange data shows that in April, net long positions for tin investment funds on the London Metal Exchange hit a historic high but have since slightly decreased.

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