By Andy Home

LONDON (Reuters) – Tin Demand Overview

Tin demand last year was weaker than expected and is projected for a modest recovery in 2024, according to the International Tin Association (ITA).

The soldering metal has been the consistent out-performer on the London Metal Exchange (LME) this year. The three-month price traded at $32,250 on Monday, up 27% since January.

A Year of Decline

Refined tin usage fell by 3.9% year-on-year to 357,100 metric tons in 2023, based on a survey of 80 companies responsible for about 42% of global demand. This outcome was much weaker than anticipated, with surveyed companies earlier forecasting a mild 1.6% year-on-year dip.

Total tin usage, including refined and unrefined forms, dropped by 4.9% year-on-year to 433,000 metric tons in 2023, according to ITA's provisional estimates.

Projected Recovery

The ITA anticipates a moderate recovery cycle this year, driven largely by China, with survey participants expecting 3% demand growth. Tin demand from the soldering sector, representing just over half of total global usage, was down 1% last year due to a cost of living crisis in many Western countries, impacting electronics demand. This year, a rise in tin use for soldering is anticipated at 2.5% due to broader economic recovery and the phase-out of lead in circuit-board soldering.

Demand from other sectors faced declines, with chemicals down 3.1%, tinplate down 7.6%, and copper alloys down 16.9%. Most sectors are expected to recover in 2024, except for the tin-copper segment due to challenges in China’s construction sector.

Stock Increase

Weak global demand has resulted in rising exchange inventory throughout 2023 and early 2024. Registered stocks on the LME and Shanghai Futures Exchange (ShFE) increased from 10,000 tons at the start of last year to nearly 25,000 tons by May.

These stocks continued to grow despite Indonesian export suspensions in early 2024. Chinese inventories rose significantly, with ShFE inventory reaching an all-time high of 17,818 tons in May. By the end of 2023, consumers held stocks equivalent to about 3.8 weeks of global supply, a ratio that is expected to decrease to 3.4 weeks by year-end, indicating anticipated demand recovery.

Raw Material Tightness

If, as suggested by the ITA, China is leading the recovery in demand, production issues have compounded the situation as Chinese smelters face a shortage of raw materials. The Man Maw mine in Myanmar, which accounts for approximately 7% of global tin output, has been suspended since August for an audit by local authorities.

Chinese imports of tin concentrates from Myanmar fell significantly, with year-to-date imports down 52% to 66,000 tons. This situation is affecting Chinese smelters, particularly in Yunnan and Geiju, with an expected decrease in national output.

Due to these challenges, Chinese buyers have begun turning to international markets for refined metal, with imports almost 2,000 tons in September — the highest since January.

Market Outlook

The future of the Man Maw mine remains uncertain, contributing to a scarcity premium for tin over other base metals. The global demand downturn in 2023 led to a substantial stock build, helping to reduce market volatility; however, this may change as the moderate demand recovery unfolds.

Challenges in offsetting the loss of Myanmar raw materials have resulted in a decline in total imported mined concentrates by almost a third in the first nine months of this year. As Chinese smelters struggle to improve output and inventory levels decrease, the tin market may face turbulence in the near future.

The opinions expressed here are those of the author, a columnist for Reuters.