Increased Demand for Electronics Due to COVID-19... Tin Prices Reach Highest Level in 7 Years

[Asia Economy Reporter Byunghee Park] As demand for electronic products increased due to COVID-19, the price of tin on the London Metal Exchange (LME) in the UK soared to its highest level in seven years.

Tin is well known as a raw material for beverage cans, but tin-lead alloys are seeing increased demand in electronic products. With more people working from home due to COVID-19, demand for electronics such as computers and tablets has risen, driving up tin prices through increased demand from electronics manufacturers.

The LME 3-month tin price rose about 70% from last year's low, approaching $23,400 per ton.

China's efforts to secure tin stockpiles for its domestic semiconductor industry are also cited as a cause of increased tin demand. The rise in electric vehicle production and increased US housing construction are additional factors driving tin demand.

LME Nickel Price Trend Over 5 Years [Image Source= Bloomberg]

On the supply side, disruptions have occurred as well. Smelters and mining companies were forced to halt operations due to COVID-19. According to the International Tin Association (ITA), Indonesian tin producer PT Timah's tin production last year was 45,700 tons, down 40% compared to 2019.

Consulting firm CRU diagnosed that supply was short by 8,000 tons compared to tin demand last year. CRU explained that supply shortages have continued for three consecutive years. Current annual tin consumption is about 360,000 tons.

James Willoughby, an analyst at ITA, said, "Large tin traders have sold all their first-quarter volumes, and smaller companies have already sold their annual volumes."

Transporting refined tin is also difficult due to a shortage of container ships.

As securing volumes becomes difficult, spot trading for immediate delivery is increasing in the US instead of tin futures trading. This means companies are increasing tin purchases to use immediately, even at higher costs. The LME 3-month tin futures premium soared to a record high of $1,850 per ton last week.

On the other hand, last week LME tin inventory dropped to 775 tons, near an all-time low. With additional volumes this week, current LME inventory is 1,100 tons, which is less than two days' worth of global consumption. Around this time last year, LME tin inventory was 7,500 tons.

Maritz Smith, CEO of Alphamin, which accounts for 3% of global tin production, predicted that tin prices could rise to $25,000 per ton considering supply-demand conditions and profitability.

This content was produced with the assistance of AI translation services.