Rise of tin worsens supply chain problems for electronics, solar and automotive companies

December 3 (Reuters) – Tin prices have nearly doubled from a year ago and are on course for their biggest annual increase in more than 30 years, pitting heavy users of the solder agent such as electronics companies, utilities, solar panel manufacturers, and device makers.

For automakers, who use tin in coatings, bearings, brake pads and batteries, the higher costs of tin are adding to a shortage of semiconductor chips and a surge in prices. aluminum and magnesium prices due to restrictions on energy-intensive industries in China.

Tin, which is primarily used in soldering, outperformed other industrial metals in 2021, gaining more than 90% on the London Metal Exchange (LME). It is on course for its biggest annual increase since trade relaunched in 1989, four years after the collapse of the International Tin Council which forced a suspension.

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It is up more than 90% since the start of the year

LME tin topped $ 40,000 per tonne for the first time last week, while in China, the world’s largest refined tin market, prices rose about 100% on the Shanghai Futures Exchange this year.

“There are few places in the value chain that don’t feel the pain of a higher tin price,” said Willis Thomas, senior consultant at CRU.

He added, however, that photovoltaic (PV) companies, which use solder tape to join solar cells, would likely be the most severely affected, as they have less opportunity to pass the additional costs on to their customers due to the “fiery price competition.” in photovoltaic panels. “

Global Tin Use by Application, According to ITA

Cui Lin, chief representative of China at the International Tin Association (ITA), estimates that the demand for tin from the photovoltaic industry will reach around 15,000 tonnes this year, compared to just 8,000 tonnes in 2019.

“The stock continues to go down which has affected the price quite dramatically,” she said.

Tin inventories drop to lowest level in several years as demand exceeds production

Inventories of tin in LME-registered warehouses reached their lowest level since 1989 in early November and currently only stand at 1,365 tonnes. ShFE stocks are near a five-year low.

Chinese tin smelters have had to cut production due to reduced energy use this year, but not to the same extent as aluminum and magnesium manufacturers, while a host of other constraints tin supply worried the market.

Gap between month 1 and month 3 of ShFE tin contracts hit record high last week

Repeated disruptions to ore shipments from Myanmar due to COVID-19 containment measures have restricted production of refined tin in China, which nonetheless grew 15.1% year-on-year in first 10 months of 2021, according to state-backed research house Antaike.

Elsewhere in Asia, Malaysia Smelting Corp (MSCB.KL), the world’s third-largest producer of refined tin in 2020, declared force majeure on deliveries in June, while Indonesia is considering a ban on tin exports to from 2024. read more

“For tin in particular, supply disruptions and low inventories have been the key theme of the past year,” said Tom Mulqueen, research manager at Amalgamated Metal Trading (AMT) Ltd.

China tin prices expected to stay well above average until 2022

The ITA estimates that global consumption of refined tin will increase by 7.2% in 2021, after falling 1.6% to 361,900 tonnes last year as the pandemic disrupted global industries.

However, in some ways life under foreclosure has been a boon to the tin.

“Tin demand has benefited significantly from the rapid transition to working from home,” Mulqueen said, highlighting increased spending on white goods and home appliances that still use more tin-intensive circuit board technology, especially in China, and a demand for non-perishable products packaged in tinplate.

“As the global economy normalizes after the pandemic, are some of those tin-specific pandemic drivers starting to fade? I think that’s a key question and uncertainty for demand year next, “he added.

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Reporting by Tom Daly; Editing by Gavin Maguire and Richard Pullin

Our Standards: Thomson Reuters Trust Principles.

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