Amid supply shortages and increasing demand, tin is turning out to be the commodity of the moment. Since January this year, the price of tin has risen almost 50% from $21,000 to just over $31,000 per tonne today, and more than doubled since its low of around $14,000 per tonne in March 2020.
Tin is used primarily for soldering together electronic components. According to the International Tin Association, close to 50% is used for solder alone. The rest is used for chemicals (18%), tinplate (12%), batteries (7%) and alloys (5%). The metal already has a multitude of uses, from circuit boards, electric vehicles, IT systems to renewable energy but with the advent of 5G, in the next five to ten years, tin will be used for smart devices, macro and microcell base stations as well as data centres.
3-4% growth in tin demand forecast
According to Jeremy Pearce, market intelligence and communications at the International Tin Association (ITA), there is every reason to believe that the strong demand for tin will continue. “As we head towards the combined force of an energy revolution and the fourth industrial revolution which includes 5G adoption, I believe we could see a 3-4% growth in tin demand over the next few years. All assuming we have no major geopolitical shocks or pandemics, of course.”
Yet with prices at ten-year highs – in April 2011, tin reached $32,000 – today’s cash price of tin is $5,000 higher than the 15-month forward price. This issue of backwardation – where the current or spot price is higher than its future price – essentially means that demand is outstripping supply hence tin supplies are being squeezed.
There has been a significant shortage of tin in the first two quarters of this year, according to ITA’s market analyst, James Willoughby. Soaring electronics demand – spurred on by the work-from-home movement – combined with COVID-related supply issues, has seen tin buyers relying heavily on global stockpiles. In early June, the amount of tin in London Metal Exchange-registered warehouses neared historical lows with just 755 tonnes available, down from 1,870 tonnes at the start of the year. Meanwhile, Shanghai stocks have almost halved from a 2021 high of 8,853 tonnes to 4,563 tonnes.
Major deficit in global tin forecast
The ITA is currently forecasting a deficit of 13,500 tonnes between production and consumption this year, although the use of tin stocks should lessen that felt by the market to around 10,000 tonnes.
However, despite the annual deficit, Willoughby believes that tin prices are nearing a peak. As COVID restrictions are loosened, consumer spending will move back toward travel and entertainment, away from electronics, reducing demand. On top of this, supply issues are likely to reduce, bringing the market closer to balance in the second half of the year.
In addition, there are some positive signs coming from the mining companies themselves. 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.
Explore Tin ETFs
| Product Name | ISIN | Exchange Ticker | Listing Currency |
| WisdomTree Tin Hargreaves Lansdown | Interactive Investor | AJ Bell Youinvest | Charles Stanley Direct | EQi |
JE00B2QY0H68 | TINM | USD |
