Tin Prices Up, Has Production in Myanmar Reached a Peak?

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Tin prices continue to march higher. Tin is one of the best performers among industrial metals this year, up more than 40% from its January’s lows.

3M LME Tin. Source: MetalMiner analysis of Fastmarkets data

Three-month London Metal Exchange tin price. Source: MetalMiner analysis of Fastmarkets.com data.

The metal continues to rise on a bull narrative of supply shortfall this year.

China’s Tin Production Falls

The Chinese administration began environmental inspection at eight major provinces starting July 19th, leading to smelters in China either suspending or cutting back production.

Two-Month Trial: Metal Buying Outlook

The recommended plant relocations and maintenance operations are expected to keep smelters idle for more than a month in some cases, with many mills not yet clear on possible restart dates.

Affected smelters account for some 45% of China’s annual tin production, or around 110,000 metric tons of capacity. The cuts will result in a sharp drop in refined tin output in July and August by Chinese tin smelters, leading to the ongoing upward pressure on domestic tin prices.

Myanmar’s Production May Have Peaked

Tin production in Myanmar has surged more than 10-fold over the past four years, accounting for more than 10% of global tin mine supply and helping to make up for falling Indonesian tin exports. However, according to a recent study released by the International Tin Research Institute, it appears that Myanmar tin production is peaking at some 50,000 mt per year, although there is still significant potential for the discovery of new ore resources.

Moreover, the ITRI believes that the increase in China’s imports by Myanmar this year, up 88% on the year to date, is a result of a depletion of tin ore inventory accumulated over the past few years, hiding a decline in mining activity. According to the group, the longer-term outlook for production in Myanmar mainly depends on whether there are new resource discoveries in the next few years. Otherwise, production may be near peak to then decline.

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If ITRI is right about Myanmar’s outlook for tin production, tin bulls might continue to find reasons to push prices up, given that Indonesian’s tin exports have declined over 25% for the first half of the year.

 

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