SMM data, as well as ITA figures, indicate that refined tin production in China has fallen considerably this year, with estimates ranging between 6% and 9%, respectively. This comes on the back of low ore supply due to reduced ore imports and domestic mine accidents. Li Ziyan, senior tin analyst at SMM, indicated that tight ore availability – combined with maintenance to YTC’s smelter – will lead to a sharp supply decline in the final two months of the year. This should push prices above the 140,000 yuan/tonne (US$ 20,000/tonne) mark by the end of the year.
Li Ziyan also forecast Chinese domestic ore production to fall by 5,000 tonnes (~6% YoY), which should help to keep prices in the 140,000 – 150,000 yuan/tonne range (US$ 20,000 – 20,500/tonne), while demand was likely to increase as the US and China head towards a partial unwinding of trade tariffs.
Our view: In line with other analysts, SMM are positive on the tin market for the remainder of the year. While we are forecasting stable demand in Q4 and falling supply (particularly in China), we expect that any price increase this year will be resisted by the high stocks on the LME. In 2020, we also see demand returning to the market as economic growth recovers and uncertainty dissipates. However, currently idled production is likely to re-enter the market to cope with increased consumption. Next year, we see tin recovering from current uncharacteristic lows, but feel that average price forecasts of US$ 22,000/tonne are slightly optimistic.