A 115-year-old American tinplate producer has closed after a policy U-turn involving US regulators who promised import tariffs up to 300% and the International Trade Commission (ITC).

One of the three US-based steelmakers, Cleveland-Cliffs Inc., who own and operate the Weirton tinplate plant in Virginia has announced its closure after the ITC voted to reject a US Department of Commerce (DOC) policy to introduce and increase tariffs on tinplate steel imports.

In August 2023 Cleveland-Cliffs Inc. and the United Steelworkers union petitioned the US Government for anti-dumping duties against eight countries and stronger duties against China. The petitioners argued that Chinese companies, subsidized by the government, were selling tinplate steel at below-market prices, undermining US manufacturing.

Regulators agreed and the US Commerce Department (DOC) and US International Trade Commission set proposals to increase import tariffs as high as 300% for China, as well as introducing duties against Canada, Germany, the Netherlands, the UK, South Korea, Taiwan, and Turkey.

The announcement was widely unpopular with consumers, particularly the Consumer Brands Association (CBA). CBA Vice President of Supply Chains Thomas Madrecki commented that the tariffs will “make can making and food manufacturing less competitive in the US, and significantly reduce consumer buying power.” A CBA-commissioned study estimated that up to 40,000 jobs would be put at risk to protect 66 jobs if these regulations were enacted.

Following a letter of opposition to the International Trade Commission (ITC) and DOC from the CBA and 28 stakeholders, on 06 February 2024, the ITC voted unanimously to reject the proposed tariffs.

The following week, Cleveland-Cliffs announced on 15 February that the Weirton plant would cease production indefinitely from April 2024. The company pointed to the recent ITC ruling as a reason for the closure. Chairman, President, and CEO Lourenco Goncalves commented “Despite the Department of Commerce finding evidence of dumping and subsidization from respondent countries, the ITC shockingly ruled against imposition of tariffs, keeping the uneven playing field in place and making it impossible for us to viably produce tinplate.”

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Authorities in Wa State earlier this month announced a change in mining tax policy effective from 7th February 2024, with all producers now required to pay a universal 30% tax-in-kind on tin concentrate exports.

The autonomous northeastern state of Myanmar suspended all mining from 1st August 2023, and while extraction of other commodities could resume from 3rd January 2024, mining at Man Maw mine area remains banned. The Man Maw mine area accounts for almost all tin production in Wa State.

Previously, exports of concentrates grading below 20% Sn were subject to a cash tax, however, the Wa State Central Economic Planning Committee (EPC) has revised this so that all tin concentrate exports are subject to the 30% tax-in-kind regardless of grade.

In a document seen by ITA, the EPC wrote on 7th February that the changes were made with immediate effect due to factors relating to financial reserves and the future development of the mining industry in Wa State. At the end of 2023, the EPC confirmed that it had assumed ownership of all mineral rights and announced a restructured exploration permitting and mining licensing process, which were reportedly introduced to increase transparency and improve sustainable industry practices.

The effect of the mining suspension has been muted in recent months as producers stockpiled ores and concentrates ahead of the ban, and the processing of ore stockpiles was allowed from September which allowed continued concentrate exports to China. Concentrate exports to China from Myanmar in 2023 stood at 40,600 tonnes Sn, marking a 15% decrease from the previous year.

The authorities have issued no further updates regarding the tin mining suspension at Man Maw.

Our view: While local traders had predicted a resumption of mining after Spring Festival, ITA is not aware of any changes to the ongoing mining suspension. The policy change may indicate the government wishes to restore its strategic stockpile which has been drawn down by the suspension.

Continued disruption to concentrate supply in China, coupled with a refined tin supply squeeze relating to Indonesia licensing delays, paints a challenging picture for the industry in H1 2024.

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China imported some 28,986 tonnes of tin ores and concentrates (gross weight) in March 2022. This material was estimated to contain some 11,100 tonnes of tin, up 85% both month-on-month and year-on-year.

Some 74% of the estimated tin content came from Myanmar, totalling roughly 6,700 tonnes. This marks a significant increase on February’s total (72%) and year-on-year (49%). Imports from other countries were also up month-on-month (110%) and year-on-year (193%). Significant volumes of concentrate were shipped from Australia and the DR Congo – two usual sources – but also from Thailand (some 510 gross tonnes).

Refined tin trade, both in and out of China, also hit highs in March. Some 1,946 tonnes of metal were imported in March, with 1,224 tonnes moving in the opposite direction. Indonesia was the primary source of imported refined tin (1,831 tonnes), while exports were primarily to Europe (Italy and the Netherlands) or elsewhere in Asia (South Korea and Taiwan).

Our view: High tin prices in China during March encouraged significant imports of tin concentrate and refined tin metal. Imports from Myanmar maintained their high level during the month, while imports from the rest of the world jumped.
Although local outbreaks of COVID have been hindering shipments of tin concentrate from mine sites in Myanmar and have closed one of the port towns (Menglian), they have had little effect on the volume shipped to China. Instead, local Myanmar government sales of tin concentrate have been supporting volumes.

Refined tin imports spiked in March to the highest since July 2020, but came in under our initial estimate of 3,000 tonnes. It is likely that some material was delayed at ports and will arrive in April instead.

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According to the latest China Customs data, China imported 3,674 tonnes of refined tin in May 2020. This is a 1762% increase from the same period last year. Refined tin imports in May recorded the highest monthly imports since March 2012, with the majority coming from Indonesia (2,586 tonnes) and Bolivia (901 tonnes). In the same month, China exported 503 tonnes of refined tin, up 10% year-on-year (YoY), giving a balance of over 3,000 tonnes.

Refined tin imports from January to May totalled 7,697 tonnes, a ten times increase YoY. Exports totalled 1,935 tonnes, a 58% decrease YoY. The net balance shifted from nearly 4,000 tonnes exported between January and May 2019, to net imports of nearly 6,000 tonnes in the same period in 2020.

In terms of tin ore and concentrate, imports in May were 14,875 tonnes in gross weight, including 14,405 tonnes from Myanmar. The estimated tin content in these imports was 3,100 tonnes, up 19% month-on-month (MoM) and down 24% YoY. 2,900 tonnes of this metal content originated from Myanmar, up 32% MoM and down 24% YoY. So far this year, imports of contained tin totalled 16,700 tonnes, down 17% YoY, including 15,000 tonnes from Myanmar, down 18% YoY.

Our view: The record May refined imports were mainly due to domestic price much stronger than LME price, resulting in very profitable import arbitrage. The price on the Shanghai Futures Exchange recovered more rapidly than on the LME. However, with the LME tin price bouncing back to around 17,000 US$/tonne since early June, the import arbitrage window for refined tin has closed.

While imports of tin concentrate from Myanmar were higher in May than April, strict border controls are expected to continue throughout July. This hinders the movements of some workers into Myanmar, restricting local tin concentrate production. In June, concentrate shipments from the country are expected to be slightly more than 3,000 tonnes.

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The tin industry in China is beginning to recover from the COVID-19 outbreak, with imports of tin concentrate returning to normal levels. Refined metal imports remain elevated as demand grows.

According to the latest customs data, China imported 4,000 tonnes of tin-in-concentrate in March, an increase of 11% year-on-year. Imports from Myanmar were 3,700 tonnes tin-in-concentrate, a 19% YoY increase.

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Imports of refined tin metal into China increased eight-fold during the country’s quarantine to stop the spread of COVID-19.

The outbreak of the novel coronavirus (COVID-19) forced the Chinese government to quarantine the country, halting the majority of domestic refined tin production. Only government-owned smelters, including Yunnan Tin, operated during the lockdown. Output was, however, much lower.

During the lockdown, China imported over 1,500 tonnes of refined tin. This was an increase of over 800% year-on-year (YoY) and a continuation of the high imports seen in December 2019, the highest since early 2017. Exports of refined tin were reduced; China shipped out just 520 tonnes, down 69% YoY.

Imports of concentrates also fell during the period of lower smelter activity. According to the latest customs data, China imported 24,678 tonnes of tin ore and concentrates in January and February. The estimated tin content was down 22% YoY to 7,000 tonnes, with 89% of the material mined in neighbouring Myanmar.

Our view: Mining in Myanmar has still not fully resumed after the Spring Festival holiday. Workers returning to the country from China are subject to a 14-day quarantine period, while the recent collapse in tin prices has seen some miners stop mining activity. Shipments from the country are now pre-holiday stocks, and we expect exports to remain low until May at the earliest. This is unlikely to affect the sentiment in the tin market, which is firmly focused on the spread of COVID-19 globally. According to sources in the country, the increased imports were due to a large import arbitrage between the LME and SHFE tin prices.

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China’s import arbitrage continued to widened from September as the SHFE tin price performed better than the LME. Usually, this is seen as an opportunity to import refined tin into the country. However, based on latest official customs statistics, China’s refined tin imports in October were just 170 tonnes, down 46% month-on-month (MoM), but up 25% year-on-year (YoY). In September, China’s refined tin imports were 314 tonnes, exceeding exports for the first time this year.

Customs data also show that China imported over 12,500 tonnes of tin ore and concentrate in October, 12,000 tonnes of which originated from Myanmar. The estimated tin content of ore and concentrate imports in October was 3700 tonnes, down 35% MoM and up 12% YoY while that from Myanmar were 3400 tonnes, down 33% MoM and up 10% YoY. However, the estimated tin content of these imports so far this year were 41,100 tonnes, down 12% on the same period in 2018.

Our view: As a result of mine closures and lower imports, the Chinese concentrate market remains constrained. To relieve the pressure of the raw materials shortage, Gejiu Yunxin Non-ferrous Electrolytic Co., Ltd. announced that it will cease production for around 15 days for maintenance. However, this will only reduce refined tin production by some 200 tonnes over the short maintenance period.

More noticeable is the decline in refined tin exports and falling SHFE tin stocks. While exports were high during the first half of the year on the back of the strong LME price and constrained Indonesian supply – up some 60% on H1 2018 – they have since fallen. Q3 exports of refined tin were down some 63% year-on-year. SHFE stocks have fallen from highs of 8,660 tonnes in March to just 2,966 tonnes on 29 November, a decline of 65%.

However, the tight market and fall in exchange stocks has not seen imports increase due to the lack of profit to be made on imported tin. Demand is reportedly satisfied by the current level of production, while imports are impacted by regulations. The most common grade of tin in China is 99.95% Sn, compared to a standard LME grade of 99.85% Sn, and so the spot market price for ex-China material can be up to some 3,000 yuan/tonne lower than the SHFE active contract futures price. Furthermore, material that is directly taken out of LME warehouses – where there is currently ample material – is even less profitable. Material on the exchange does not come with a certificate of origin, which importers of refined tin into China require to avoid significant additional tax rates.

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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.

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At about 6:30 on 28 October, the roof at a mine owned by Qingdaxiyuan Mining Investment Co., Ltd, collapsed. The local government announced that, after an initial search, two people had been killed, with a further 11 people trapped inside the mine. In response to the collapse, the authorities have initiated an emergency response, asking local mines to cease production and to undergo safety inspections.

Guangxi China Tin, one of the local mines and the second largest tin mining company in China, produces most of its tin concentrate from the region. The company has only just begun mining following maintenance in September, but is once again unable to produce. In 2018, Guangxi China Tin’s total mine production was around 15,000 tonnes, 95% of which came from Hechi.

The accident comes at a time when China’s tin concentrate market is experiencing marked tightness. However, in response, China’s imports of tin concentrate and refined tin both increased in September. According to the latest customs data, China imported 5,700 tonnes of tin-in-concentrate during September, 95% of which came from Myanmar. Total imports were up 58% month-on-month (MoM) and 46% -year-on-year (YoY). China also imported some 134 tonnes of refined tin in September, up 224% MoM and 59% YoY.

Our view: The date after which mines can resume production has not yet been set, but it is likely that the required safety inspections could take up to a month. It is unlikely that the affected mine will begin producing again this year. As a result of the further-tightened market, we expect China to continue to increase its tin imports, both in the form of concentrate and refined metal, and it is likely that China will remain a net importer for the remainder of the year.

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The JFX initially aimed to bring a physical tin contract to the market in 2013, but this was delayed, with the contract officially launching on 21 August. Initial trading was marked by an export of 1,410 tonnes of tin from Pangkalpinang, located on the island of Bangka. This material is understood to have been Timah brand, with the company shifting its exports from the ICDX to the new JFX contract. When the JFX initially planned to launch the contract, it was backed by the majority of private smelters, with Timah instead backing the ICDX.

Our View: While the option of a different trading contract is interesting, this does not help private smelters, who remain unable to export due to regulations set by the central government, rather than by one of the country’s exchanges. The switch of exchange may have caused the decline in refined tin exports from Indonesia last month, with sources close to Timah citing export license renewals as the cause of the issue. With a new license seemingly acquired, it is likely that material – stockpiled in the interim – will be released to the market.

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