Global tin market seen swinging into deficit in 2015 -ITRI

LONDON- The global tin market is expected to fall into a deficit of 5,000 to 10,000 tonnes in 2015 from a balanced market this year following an improvement in demand, industry group ITRI said on Friday.

Benchmark three-month tin prices on the London Metal Exchange (LME) are expected to average $22,000 per tonne in 2015, compared to about $20,075 on Friday, Peter Kettle, markets manager at ITRI, told a seminar in London.

Last year, ITRI forecast a tin deficit of 12,400 tonnes for 2014 largely due to expectations of increased demand, but revised its forecast in August, saying a deficit was unlikely to appear because of a weak electronics sector.

Solder used in electronics is the most important consumer of tin, accounting for about half of global use of the metal.

Recently, though, demand for tin has been healthy. “We do have direct evidence that consumption is holding up rather well,” Kettle said.

One factor weighing on the market has been growing output from Myanmar, where exports are due to climb to 28,000 tonnes next year from 26,000 forecast for this year and 17,000 in 2013, Kettle said.

Myanmar’s output is expected to level off after next year.

The world’s top exporter Indonesia is expected to keep shipments at about 80,000 tonnes next year, unchanged from this year, but they are expected to fall in coming years due to government restrictions, Kettle said.

The Indonesian government is considering imposing tin output limits and export quotas, a mines ministry official said in October.

“The long-term sustainable level of production is more like 50,000 tonnes rather than the 100,000 tonnes plus we’ve seen in some recent years,” Kettle said.

If a weak global economic environment puts further pressure on the tin price, it should be well supported because higher-cost Indonesian mines may have to close, he said.

Some 85 percent of global tin mines are at break even or above based on current prices, according to ITRI.

There is also a need for higher tin prices to stimulate the funding of new mines, where costs are higher, since only slightly over half of projects are break even at current prices, said Tom Mulqueen, an analyst at ITRI.

ITRI’s base case sees LME tin prices surging to about $40,000 a tonne within about five years due to lack of new mine supply.

Source: SMM

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