Tin

After trading with volatility in 2017, tin had a challenging 2018, with the price of the metal trending downward for the majority of the year. 

Though tin has had a rough start in 2019, analysts remain optimistic about the long-term outlook for the tin market. Tin is primarily used to coat other metals, due to its ability to retain a high polish and prevent corrosion in tin cans. Tin is also an alloy metal used in soldering and the production of rare earths superconducting magnets.

As a result, interest in tin investing is increasing. To help investors looking to jump into the sector, the Investing News Network put together a brief guide to tin supply and demand dynamics, as well as an overview of how to start investing in this silvery-white metal.

Tin investing: Supply and demand

The tin market has been in deficit for eight of the last 10 years, and is expected to remain in deficit as tin demand increases.

Because of its many positive characteristics, there are a lot of uses for tin. For example, the metal is malleable, ductile and not easily oxidized in air; it’s also lightweight, durable and fairly resistant to corrosion. Those qualities make tin, which is obtained from the mineral cassiterite, a good candidate for use in solder, as well as tinplate, chemicals, brass and bronze and other niche areas.

In terms of where tin is produced, China was the world’s top producer in 2018; it put out an impressive 90,000 metric tons (MT) of the metal. China was followed by Indonesia at 83,000 MT and Burma at 45,000 MT. Total world output for the year was 310,000 MT, and world tin reserves sit at 4.7 million MT.

As of 2018, the world’s top tin-producing company was China’s Yunnan Tin (SZSE:000960), which produced 77,789 MT of refined tin. That’s well in front of second place PT Timah (IDX:TINS), which produced just 33,444 MT in 2018, up 10.6 percent from the previous year.

Like tungsten, tantalum and gold, tin is a conflict mineral. Armed groups in the Democratic Republic of Congo (DRC) earn hundreds of millions of dollars every year by trading these minerals.

Currently, the Dodd-Frank Act in the US requires public companies that source minerals from the DRC to produce an independently audited report about the ownership and source of the mined commodities to the US Securities and Exchange Commission.

Tin investing: How to start

As mentioned, investing in tin is becoming more and more appealing as demand for the metal grows. Tin is also interesting for investors because of its ability to serve as a hedge against the US dollar and inflationary pressures in certain environments.

Those wanting to begin tin investing may want to consider exchange-traded funds (ETFs) and futures. According to CommodityHQ, many ETFs include exposure to tin, generally along with copper, nickel, lead and aluminum. Tin futures are traded on the London Metal Exchange under the code SN, with contract pricing in US dollars per tonne. Clearable currencies include the US dollar, yen, pound and euro.

Of course, tin investing can also be done by buying shares of tin-focused companies. Tin-producing companies may be a good place to start, though if you are an investor with more risk tolerance you may also want to look at tin exploration companies.