In response to the rising tin price, investment bank UBS has issued a report to clients summarising the key supply and demand factors that drive tin prices.

Australian Resources Weekly

Tin 101

Tin (Sn) is a silver-coloured metallic element which is highly malleable and soft. Importantly, it does not oxidise easily in air and is predominantly used as a coating to prevent corrosion. It is rarely used as a pure metal but instead alloyed with other metals to form soft solder, bronze, type metal and pewter. Tin is a poor conductor of heat and electricity and possesses low tensile strength.

Uses and producers

Tin is well known for its resistance to corrosion and its ability to coat other metals. The major consumption demand, (~50%) of tin comes from the solder (an alloy of tin and lead) industry. However, its use can be traced back to 3000BC when alloyed with copper to form bronze. China remains the largest tin-producing country with ~45% of global reserves in 2014, which is followed by Indonesia at 19%. Notably, Myanmar has been the fastest-growing supplier in recent years, while new government regulations in Indonesia may cause output to fall further, with exports already down 50% in Q1 16.

Market balance

Tin is a relatively small base metal market of approximately 340-370kt pa, which contrasts with copper of 24Mt pa (refined). Demand has grown at a ~0.02% CAGR from 2012-16. Almost all growth recently has come from China and other emerging markets, as both solder and tinplate usage increases. Since January this year, tin prices have rallied strongly due to the news of several Chinese smelters reducing production output and restricted exports from Indonesia.

Market performance week in review

In the past week, RRL reported a solid FY16 result with an in-line EBITDA and 9¢/ sh dividend, previously flagged. PDN reported a headline loss for FY 16 of (US$122m) against our loss of US$43m and also advised a change of mine plan for Langer Heinrich. On Wednesday, IGO released their FY16 result with a net loss of $59m pre-reported and surprise 2¢/sh dividend. AWC has jointly announced with Alcoa amendments to the AWAC JV agreement. SFR, PRU and PT Adaro also reported FY16 results. AWC was the top performer last week, up 7%; SLR was the weakest, down 17%, following the release of its results, for the week ending 2 September 2016.