Despite a strong rebound in output, the tin market is still dangerously short on supply. How will this affect the tin price forecast? Experts are rushing to weigh in.
According to Reuters, the International Tin Association (ITA) reported that global refined tin production increased by 11% to 378,400 metric tons last year. But while output is up, so is demand. This is especially true of the electronics sector, which also accounted for the vast majority of last year’s demand.
In December 2021, overall demand growth was 32.6% year over year. By March, it had cooled somewhat to around 23%. That said, a Capital Economics report states that demand is still substantial enough to keep prices elevated in the short term.
The Market Remains Incredibly Tight
The overall tightness of the market is evident in the inventory levels and the resulting physical delivery premiums. LME inventory levels are only up by 640 tons since January, topping out at a critically low 2,685 tons. Experts have been quick to note that this figure represents just two days’ worth of global usage.
Not surprisingly, physical delivery premiums remain high as well. Indeed, Reuters recently reported that Fastmarket US Midwest premium had reached $2450 per ton over the LME cash price. This is down from last August’s $3950, but still way above the $600 levels seen in early 2021.
Meanwhile, shipments destined for China out of Port Klang and Singapore are counteracting the modest physical deliveries into Antwerp and Baltimore. In fact, China turned from a net exporter to a net importer this year, sucking in nearly 2000 tons and further ratcheting up pressure on metal availability.
It all begs the question: do the next 12-18 months promise more of the same? Not necessarily. Sure, supply remains tight. However, as post-pandemic consumption migrates from consumer goods to services, demand for electronics goods is likely to cool.
Multiple Factors Still Play for the 2022 Tin Price Forecast
According to Capital Economics, growth in the sale of semi-conductors started to slow in 2021. This is a trend that may accelerate as surging interest rates dampen spending across the Western World. Tin prices remain stubbornly high for now, but recovering mine output and cooling demand should weaken support from these price levels in H2.
All in all, it’s probable we’ll see lower LME and reduced physical delivery premiums in the second half of the year.
By Stuart Burns via AG Metal Miner
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