Old metals don’t die, they wait for a technology to be invented so they can stage a comeback, which is exactly what’s happening with tin, which has a rising price thanks to excellent fundamentals of tight supply and growing demand.
Up 22% since the start of the year, tin has outperformed other base metals such as zinc and nickel, and almost matched copper which is up 23%.
None of the base metals, which take their name from being relatively common and cheap compared with precious metals such as gold, silver and platinum, has been a newsmaker this year which is all about gold.
Electronics “Glue”
But, over the past 12-months tin has developed traction thanks to its growing use as solder in circuit boards, solar power, and other electronic equipment, earning the nickname of the “glue” which holds the digital world together.
Set against increasing demand is supply concern, especially from Indonesia, a major producer which has been cracking down on illegal miners, temporarily limiting supply.
Not since the heyday of pewter beer steins, an alloy of mainly tin and copper, or the much earlier Bronze Age (mainly copper with tin) of 3000 years ago has the outlook been brighter for tin.
Archaeologist Roman Mischker holds the blade of an early Bronze Age hatchet in the central warehouse of the Saxony-Anhalt State Office for Monument Preservation and Archaeology. Photo: Sebastian Willnow/dpa-Zentralbild/dpa (Photo by Sebastian Willnow/picture alliance via Getty Images)
picture alliance via Getty Images
From $28,000 a ton in January, tin has traded up to last sales at $35,393/t and is expected by the investment bank Citi to average $40,000/t next year, possibly driving up to its all-time high of $51,000/t reached in 2022.
In a preview to a London Metal Exchange conference (LME Week) which is ending today, Citi said it was bullish on three base metals, copper, aluminum, and tin.
The first two, copper and aluminum, made headlines at the conference but tin slipped past without much notice despite its impressive performance so far this year and robust outlook.
Citi said tin supply was recovering but the metal remained structurally vulnerable to policy-led disruption in major producing countries, a list topped by China, Indonesia, Myanmar, and Peru.
“Tin is leveraged to similar upside drivers as copper and aluminum from an expected 2026 cyclical growth rebound and structural energy transition demand despite near-term growth headwinds,” Citi said.
Best Base Metal
The outlook for tin is brighter than that for most other base metals with zinc, lead and nickel all suffering from strong underlying supply expansion and limited demand growth.
The base case for tin seen by the bank is a 60% probability that the forecast price of $40,000/t will hold through 2026, with a 20% probability of climbing to an average of $50,000/t, and a 20% probability of sliding back to an annual average of $30,000/t.
“Our bull case envisages a re-run of the physical stock-out (no stock) in 2021 that saw spreads heavily into backwardation (immediate price higher than the forward price) on scarcity conditions,” Citi said.