Industrial Metals

Tin Investing

The tin price saw a slight boost on Monday, but higher output due to El Nino could pose a threat moving forward.

The tin price got a boost on Monday on the back of good demand from the alloy industry, Business Standard states.
Specifically, LME tin opened at US$15,900 per metric ton (MT), hitting a high of US$15,950 per MT and a low of US$15,800 per MT before closing at US$15,950, as per Metal.com.
While that’s certainly positive, tin has otherwise remained fairly flat in October, and its low price has weighed on companies working in the space. That’s translated into a drop in production — refined tin output from China fell 3.6 percent, to 14,380 tonnes, in September, reversing a rise of 6.1 percent the previous month.


Though that drop in tin production should have translated into a better tin price, stagnant Chinese demand has kept that from happening. Luckily for tin-focused investors, stronger growth is expected from China moving forward, and that could ultimately be positive for the tin market.
Illegal tin mining in Indonesia has also put downward pressure on the tin price, though that may soon become a thing of the past. The country, which is the world’s top exporter of tin, put new export rules into effect on August 1. They require exporters to present proof that their tin is from government-certified mines. What’s more, only tin ingots, tin solder and tin plate are allowed to be shipped.

However, it’s possible that those positive factors may be outweighed by something unexpected: the weather. The strongest El Nino weather pattern in nearly 20 years is expected this year, according to Reuters, and a shorter monsoon season in Indonesia, the Philippines and Malaysia may help miners produce more tin, nickel and bauxite.
“Dry weather is a good time to mine, because most of our production is off-shore and also the weather is calmer,” Agung Nugroho, corporate secretary at PT Timah, told the publication.
It will be interesting to watch how that mix of factors plays out as 2015 draws to a close.
 
Securities Disclosure: I, Kristen Moran, hold no direct investment in any of the companies mentioned in this article.
Related reading:
How Illegal Mining in Indonesia Affects the Tin Price
Can Further Restrictions Save the Tin Price?

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