China’s refined tin production totalled 56,800 tonnes between January and April 2018, up by 8% compared to the same period of last year, according to a recent survey carried out by the International Tin Association.
The increase in refined production from January to April was facilitated by plentiful raw materials supply. The estimated tin metal content of imports from Myanmar in Q1 totalled some 18,000 tonnes, up 31% compared to the same period last year as a result of a large sale of local government concentrate stocks. Communications with traders and producers have indicated that the tin content of imports in April are estimated to be about 3,000 tonnes and for May between 5,000-7,000 tonnes, although this is yet to be confirmed by official customs data. This would indicate that the tin content of imports from Myanmar from January to May totalled some 26,000 to 28,000 tonnes, up 6% to 10% year-on-year.
In addition, from January to May, China’s mine production has risen due to a significant increase in output from Inner Mongolia. The tin-in-concentrate output from the region has increased by more than 2,000 tonnes in the first half of 2018 relative to last year, with an annual increase of 6,000 tonnes anticipated. Tin mine production from other provinces in China has also shown some increase due to higher concentrate prices relative to previous years.
Our view: Despite the stronger output by Chinese tin smelters in the first part of the year, there are widespread expectations domestically that lower concentrate supply from Myanmar will impact tin production in the months ahead. These concerns are believed to be the main fundamental driver behind the SHFE tin price rally in late May. While we also anticipate that typical shipments from Myanmar will be at lower levels later this year we caution that output has been notoriously difficult to predict in recent years and therefore that a significant decline in annual output is far from certain. This uncertainty will remain until shipment volumes become consistently lower over a period of months. This is yet to be the case in 2018.