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Over the course of the last two years, tin prices found a comfortable spot at the bottom. With no where to go but up, it is time to see what 2016 has in store for the industrial metal.
Over the course of the last two years, tin prices found a comfortable spot at the bottom. With no where to go but up, it is time to see what 2016 has in store for the tin market.
Looking back, Roskill noted that the “tin market has been in a deficit for six of the last ten years with gaps between production and consumption generally having been limited to around 4% of the total market.”
Still, it seems that despite the deficit created due to lack of new supply and reduction of secondary supply, the tin market has actually been in a surplus, with the gap in supplies being filled with production out of Myanmar. Likewise, as Roskill noted in its 2014 Market Report, increased production of refined tin in China has been largely driven by increased imports of concentrates, with domestic mine production and secondary recoveries remaining stable.
Stepping back a few years, metals consulting firm, CRU forecast in 2012 that the “tin market will remain exceptionally tight through to 2016, which will be reflected in prices.”
Like Roskill, CRU viewed the tin market as “increasingly under-supplied”, however, the firm does see “new high quality projects in the pipeline to replace falling output from current mines.”
In November, the Industrial Technology Research Institute (ITRI) looked at the performance of tin over the course of 2015 in order to gauge the metal’s behavior for the coming year. Overall, ITRI speculated that the “global tin market will remain in deficit in 2015-2016, despite a decline in demand this year.”
ITRI highlights a “slump in China’s solder industry” as the overarching negative factor in the tin market for 2015.
The tin market and future supply
For their part, Avalon Rare Metals (TSX:AVL,OTCQX:AVLNF) Pierre Neatby, VP of Sales and Marketing shared his perspective of the tin market for 2015, telling the Investing News Network that “demand has been steady in the last few years but the low price has not encouraged any exploration or development of new mines.”
With current mine supply depleting, and the weak pricing environment removing the incentive to advance exploration and development projects, Neatby told INN that the “challenge is [in] finding capital to invest in new projects to replace the mines that are being depleted.”
Still, despite the dwindling supply, Neatby sees a bright future for tin. “I expect steady demand but diminishing supply so potentially some upward pressure on prices,” he said.
Tin outlook in 2016
Surveying 148 companies as part of the 5th ITRI London Tin Investment Seminar, ITRI was able to get a sample of market players that was equivalent to 46 percent of estimated total world refined tin use in 2014. With this information, the firm was able to compile an outlook for 2016 based on the estimates of market participants.
Adding survey results with its own estimates, ITRI foresees tin consumption falling by 3 percent in 2015, with world production falling overall by about 8 percent of both refined and mined output. The ending result will be a deficit of roughly 6,000 tonnes for the current year, with that deficit growing to roughly 10,000 in 2016.
“Looking further ahead we see the possibility of a new growth spurt in tin use, most probably driven by existing and new applications linked to energy conservation and storage. However this needs to be matched by investment in sustainable new supply sources which is unlikely to be forthcoming at current price levels.” Peter Kettle, ITRI’s Markets Manager said it a statement.
Securities Disclosure: I, Vivien Diniz, hold no investment interest in any of the companies mentioned.
Editorial Disclosure: Avalon Rare Metals is a client of the Investing News Network. This article is not paid for content.
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Tin Outlook 2015: Reduced Chinese Supply Could Help Prices