Tin price at close to ten year highs, on back of electronics and renewables demand

The tin price moved upward again this week, retracing much of the ground given up since it began to test new ten year highs at the end of May and beginning of June. The strong upward pressure on the price, as supply struggles to meet demand, makes tin the best performing of the major commodities this year by some margin, comfortably beating such staples as gold and silver, and even the apparent star of the moment copper.

The tin price has more than doubled over the past 12 months, from just over US$7.00 per pound back in June 2020 to a current price slightly shy of US$15.00, or US$32,457 per tonne, according to data supplied by mining.com [https://www.mining.com/markets/commodity/tin/].

The current cash price, though, is significantly higher than the 15-month forward price, which usually means that demand is outstripping supply.

Whether or not the current backwardation actually does mean tin prices will weaken in due course is an open question. The current upsurge in demand is being driven by a renewed appetite for tin for use in electronics. The demand for electronic items has been spurred by the trend to working from home over the past 18 months, while supply has been disrupted in an already tight market by ongoing coronavirus working restrictions.

China continues to dominate production, accounting for 168,000 tonnes, or about 47% of total volume, but all producing countries except Russia, Congo and Nigeria, experienced a significant contraction in mining last year. In Indonesia, tin ore production fell by 15%, in China by 4%, in Myanmar by 21% and in Peru by 9%.

As a consequence, tin buyers have been drawing heavily on global stockpiles, and in early June, the amount of tin in London Metal Exchange-registered warehouses neared historical lows with just 755 tonnes available. That’s less than half the level the stockpile stood at at the beginning of the year.

Shanghai stocks are also down.

On the production side, the International Tin Association is currently forecasting a deficit of 13,500 tonnes. It’s unlikely to stay that high however, since as the global economy reopens spending will switch elsewhere.

Nevertheless, the increasing trend towards renewables means that long-term demand is likely to hold up pretty well, as tin is used heavily in the electric circuitry that supports much of the world’s future energy supply, and is also a significant component in solar panels. It was that dynamic that lead the Massachusetts Institute of Technology to argue a couple of years ago that tin was likely to be the best performing commodity over the coming decade or so.

So far, that call by MIT looks to have been a good one, even if naysayers like the World Bank are forecasting an easing off of the tin price next year.

But although believers in tin were a relatively rare breed before the coronavirus crisis hit, MIT wasn’t quite the only one predicting great things. Companies that put their money where their mouth is in regard to tin include Afritin Mining (LON:ATM), Cornish Metals (LON:CUSN), and Strategic Minerals PLC (LON:SML). Not surprisingly, the share prices of all these companies are up significantly over the past 12 months. And there could be plenty more to come.

Yunnan Tin (YTC) is close to achieving full-scale production at its new smelter, AfriTin Mining (LON:ATM) which has tin assets in Namibia and South Africa recently announced that its tin concentrate production for Q1 of the 2022 financial year totalled 183 tonnes, containing 114 tonnes of tin metal, exceeding the production target of 180 tonnes. And a recent Cornish Metals (LSE:CUSN) Mineral Resource Estimate has showed a material increase in both tonnage and contained tin in the ground at South Crofty in Cornwall.

Story by ProactiveInvestors