Tin Prices Retrace as China (Maybe) Removes its Export Duty

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Tin prices recently experienced selling pressure on speculation that China removed it’s 10% export duty on refined tin exports.

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No official announcement has been made yet and the export duty wasn’t referenced in the country’s recently released 2017 Exports Commodities Tax Rates Table, leading many experts to conclude that the duty has been scrapped altogether

3-Month LME Tin Price. Source: MetalMiner analysis of fastmarkets.com data.

China started to impose the 10% export duty on refined tin in 2008. It has since changed China from a net exporter to a net importer, also helped by the increasing demand for refined tin within China.

The removal of this export duty is not a game changer but it will have global significance. With the removal, we would expect a closer alignment between the London Metal Exchange and China domestic tin price, due to increased opportunities for arbitrage trading. This might explain why prices on the LME fell last week.

Indonesian Production

Indonesian tin exports for 2016 totaled 63,559 metric tons, down by 9.4% compared to the previous year, according to ITRI. The decline comes from the Indonesian government more strictly enforcing its tin sector as well as the “long-term decline in tin grades as the country’s easily accessible reserves are gradually exhausted,” according to Reuters’ Andy Home.

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These two factors will likely continue to provide downward pressure on tin production this year. However, higher tin prices could also incentivize mine production, potentially offsetting the expected production decline. Overall, it’s quite uncertain whether tin production in Indonesia will run lower or higher this year.

What This Means For Metal Buyers

Tin prices are feeling some downward pressure as China seems to have removed its export ban. However, this won’t necessarily be a game changer in terms of global supply/demand balance. Overall, we continue to witness price strength across the metal complex and the recent price pullback seems normal within the context of a bull market. After the powerful rally seen last year, tin prices might need some more time to digest those gains but prices could well continue to trend higher after this pause.

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