Tin - mid - short term bullish (Barclays report)
Tin has a relatively small market compared with several other basic metals, and is relatively less attractive for capital. But its basic situation makes the long-term prospects of the metal very promising. We believe that although prices have been fluctuating since this year, tin is basically the only basic metal, and prices have increased since the end of the year. In fact, this reflects the shortage of tin in the global tin market. (About 8,000 tonnes of supply shortfall) We can also see this from the rapid decline in LME stocks. So far this year, LME tin storage has dropped from 27000 tons to 16000 tons, down 41%. We believe that the supply of tin market will continue to eat, and demand will continue to warm up.
On the supply side, the world's largest tin producer, Indonesia's production will continue to decline. In May, exports fell by 26% compared with the same period last year, while exports dropped by 16% in the 1-5 months. In the middle of June this year, the closure of the largest independent smelter in the country made us not optimistic about the supply of tin in the rest of the year. As the government continues to crack down on illegal mining, it will continue to reduce mining on the shore and even the next year's output will continue to shrink. In addition, in the next 1-2 years, the lack of new projects in the world has made us worried about tin production.
In terms of demand, China has always been a demand growth point for tin, and despite its growth in domestic production, China is still a net importer. Tin's demand for solder has increased, thanks to the government's home appliance replacement scheme, which now has 28 new provinces and cities across the country. In addition, the attraction of LME tin in Japan and Europe illustrates the enthusiasm of the OECD countries for tin demand. Because of the strong demand for electronic products, there are continuous manufacturing projects in these countries.
Tin prices are now hovering at $17000-18000 / tonne, and tin supply will be tight for at least 18 months in the future, so we expect the tin price to reach $20500 / tonne in the fourth quarter of 2011.