Why China's Refined Tin Producers Are Bullish on Prices

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As China has imported less tin in the first quarter of this year – down 38%, according to Reuters – questions linger about China’s slowing rate of growth and level of internal stocks.

Meanwhile, the ITRI reports Indonesian exports have increased over the first four months of this year compared to 2012, up 16.3% at 34,658 metric tons.

Even so, producers don’t believe the boom will continue, as lower prices and tighter quality requirements due to come into effect under new export regulations in July begin to take their toll.

It is believed only about 15 to 20 smelters will be able meet the new regulations on tin purity, Hidayat Arsani, president of the country’s 30-member tin-mining association, is quoted by ITRI as saying, from the 35 companies who are currently licensed to export tin by the trade ministry.

Still, the ITRI China International Tin Forum held in Kunming late last month held out some interesting risks and opportunities for the tin market in the years to come.

Chinese producers are confident in the future direction of prices and demand for the simple reason that there aren’t enough of them – you know, producers.

Believing firmly in medium-term growth prospects for China’s economy, domestic producer Yunnan Tin Group’s general manager, Gao Wenxiang, is quoted by the ITRI as saying that per capita GDP is expected to double to US$12,000 in the current decade.

Mr. Gao noted that China’s refined tin production and consumption had doubled over the last decade, but there had been no growth in mine production and economic resources were limited, concluding that “it is absolutely obvious that the supply of tin mines in China is far behind its own market requirement.”

But both China and global tin demand assume at least a constant on the side of consumption, and here there were some interesting developments.

For a tin forecast/outlook, check out Part Two.

Comments (2)

  1. Chris Mayhew says:

    Great article Stuart. Guess we will just have to wait and see what this means for the tin industry in the coming years.

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