Tin May Extend Gains as Myanmar Ore Output Seen Flat Then Down

Tin, this year’s second-best performer among base metals, may extend gains as ore output from the No. 3 producer Myanmar is set to decline next year, according to the International Tin Research Institute.

The nation’s output this year may remain little changed around the 50,000 metric tons of contained metal mined in 2015 before falling in 2017 by as much as 5,000 tons due to the depletion in resources and drop in grades, according to Cui Lin, chief China representative of the institute, citing its estimate based on Myanmar’s exports to China, which accounted for the majority of its shipments.

Tin slumped to the lowest level in more than six years in January as Myanmar increased its production by more than 10-fold in the three years to 2015, according to the ITRI. The metal, used mostly as solder for electrical circuits, has gained 25 percent this year on expectations for the biggest deficit in almost two decades.

“Myanmar’s tin ore industry faces a development bottleneck,” Cui said in a telephone interview from Beijing. “Their production costs are also rising as they move to underground from open-pit mining. That involves a lot of fixed-asset investment.”

The country’s production will decline if more resources aren’t discovered in the coming year or two — a potential bullish factor for prices in the medium-to-long term, according to Cui, who didn’t give a forecast for prices. Globally many new projects have also been halted because they require prices of as much as $25,000 a ton to be profitable, according to Cui. Tin in London traded at $18,400 on Tuesday.


Source: The Bloomberg Markets

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