Everyone agrees that tin’s supply and demand fundamentals look much better than other base metals like aluminum or nickel. Markets wherein producers have seriously mis-timed the new wave of production capacity and large inventory levels in the exchanges are removing any hope of their markets moving into deficit.
A better fundamental story has helped tin prices avoid further declines in Q2 and Q3. Over the past 7-plus months tin prices have traded between $16,500 and $13,500 per metric ton.
Although, Myanmar has made up for much of Indonesia’s gradual production decline, it’s still unclear whether its production has the potential to double output in the future. In September, tin prices rose amid investor concerns that new export rules could hit tin supply in Indonesia.
On August 1st, Indonesia introduced new rules for shipments. As a result there were no shipments throughout August as miners waited for approval of their exports. But the industry is now facing a second wave of rules with all Indonesian tin exporters requiring the new “clean and clear” (CnC) certification starting on November 1st. According to Reuters, only three Indonesian tin companies, so far, have met the new CnC rules.
The wave of new Indonesian supply rules might have helped to keep tin prices from falling over the past few months, but they haven’t succeeded in pushing those prices back up. Over the past two weeks, prices have fallen 8%, back below $15,000/mt. Benchmark tin prices have, so far, failed to react to the stopping and starting of exports. They have been unable to break above their 7-plus-month trading range amid a broad downturn in demand growth for metals.
Although tin prices have held well since April, the demand side of the equation might need to improve before we see prices back above $16,500/mt. Tin buyers should watch this price range and see how the market reacts to the new industry-rules. We expect price volatility to start picking up once this price range is broken.