A Changing Global Tin
Market
May 29, 2015
Cui Lin
Chief Representative of International Tin Research Institute in China
Price comparison between tin and other
LME metals
Tin
Comparison of price between April
2015 and April 2014
Zinc
Zinc
Aluminum
Index
Aluminium
Lead
Lead
Copper
Copper
LME
Nickel
Nickel
LME and tin price
index (2000 =100)
Tin
Tin
-40% -30% -20% -10% 0% 10%
Moves in trend and the confusions!

Tin has ever been one of the most popular LME metals, but now tin price has the
worst performance

Downsizing becomes the biggest concern of stakeholders for the tin market, but the
tin consumption recovered slightly in the last two years

China was one of the fastest growing consumers, but now (thanks to Burma) it has
become the fastest growing producer

No one would expect that Indonesia may cut its output——but it indeed happened!

It is expected that 2015 will see a short supply-dominated pattern again—— despite
that the error rate of estimation may be very high
Critical tin statistics in 2014: forecast error
Comparison between results and prediction for 2014

Global balance

Indonesia’s
output


China’s output

Global demand
000
tons

The figure compares the output/consumption
forecast for February 2014 with existing data
The global tin consumption is better than the
original expectation
The global tin consumption is better than
the original expectation
The main shock comes from China’s
output growth
The slump of Indonesia’s output (including
overseas re-refining) is slower than expected
Output in other regions is the same as
expected
The global balance situation was changed
from the expectation that the undersupply
would exceed 10000 tons to the fact that
the oversupply is more than 5000 tons
Global tin consumption growth trend
Tin concentrate (kt)
Fitting trend
curve:
The annual growth
rate is 1.9%
ITRI’s tin consumption
survey covers the past 11
years
Data:ITRI
Above-trend demand growth
Tin consumption according to filed of application
Ton
Consumption of each application field
Solder
Tinplate
Chemicals
Brass and
bronze
Float glass
Others
Total
Change range ％
LME metal consumption’s global growth
situation
240
220
Global consumption index, and the base
number in the year of 2000 = 100
Alumin
Aluminium
um
Copper
Copper
200
180
Nickel
Nickel
160
Lead
Lead
140
Zinc
Zinc
120
Tin
Tin
100
Data source: tin data come from ITRI, and data of other LME metals come
from CRU
80
2000
2002
2004
2006
2008
2010
2012
2014
Tin consumption of different industry
sectors
消费电子 Consumer electronics
交通 Transportation
Solder-electronics
包装
建筑
工业
其他
焊料 - 电子
Solder-industry
Packaging
焊料 - 工业
Tinplate
马口铁
Building
Chemicals
化工
黄铜
青铜
Brass&
and
bronze
Industry
浮法玻璃
Float glass
其他
Others
0
20,000
Others
40,000
60,000
80,000
100,000
120,000
Change of proportions of global mines’ output
350
300
kt
Decline in
Indonesia and Peru
印尼和秘鲁下滑，
Growth
in Myanmar (and Africa)
缅甸（及非洲？）增长
China
China
250
Indonesia
Indonesia
200
Malaysia
Malaysia
150
Bolivia
Bolivia
100
Peru
Peru
50
Other
ROW
0
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013
regions
Indonesia’s export has been declining
12-month moving total of metals examined before export
110,000
Lowest price in
August 2012
105,000
100,000
95,000
90,000
85,000
Global
financial
crisis
Jan-15
Sep-14
May-14
Jan-14
May-12
Jan-12
Sep-11
May-11
Jan-11
Sep-10
May-10
Jan-10
Sep-09
May-09
Jan-09
Sep-08
May-08
Jan-08
60,000
Sep-13
65,000
New export laws
implemented since July 1st,
2013/August 30 and
November 2014
May-13
70,000
Jan-13
75,000
Export suspension-4th
quarter of 2011
Sep-12
80,000
Impact of Indonesia’s new export laws
14,000
Total volume examined before export since implementation of new
export laws
其他
Others
12,000
焊料
Solder
10,000
Tin ingot
锡锭
8,000
6,000
4,000
2,000
0
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Output of South America’s mines
80
Tin content in tin concentrate
(kt)
70
Bolivia
Bolivia
60
50
Brazil
Brazil
40
30
Peru
Peru
20
10
0
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013
Import volume of concentrate from central
Africa
总重（千吨） Total weight (000 tons)
25,000
Other
Other
countries*
20,000
China
China
countries*
15,000
Thailand
泰国
Thailand
10,000
Malaysia
Malaysia
马来西亚
5,000
0
2004
2006
2008
2010
2012
2014
* India, Russia,
Germany and
Bulgaria
Small mining operations are at high cost
Cash cost in 2014 after ITRI deducted the cost of by-product (US
dollar/ton tin)
Small and manual mining operations
Cost (US
dollar/ton)
–Mostly in Indonesia
–Mostly in Indonesia
Emerging Burma’s supply
channel:
Lack of data, but rapid
expansion may indicate low
cost
% in the cumulative tin output
The base price fell in 2015,
but it will rise in the next years
Cash cost after ITRI deducted the cost of by-product (US
dollar/ton tin)
2019 ~ 21,000 USD
Cost (US
dollar/ton)
2014 ~ 17,200 USD
2015 ~ 15,900 USD
Falling oil price and strong dollar lower the
cost in 2015
% in the cumulative tin output
The base price of about 16,000 USD is based on the assumption that the market is caught in
an oversupply (market equilibrium price would be higher)
Besides, other fixed costs must be considered
The model predicts that the long-term market
equilibrium price is about 25,000 USD
Full costs of ITRI in 2019 after deduction of by-product costs
(USD/ton tin)
Cost (US
dollar/ton)
Long-term market equilibrium price is about 25,500 USD
% in the cumulative tin output
100%≈300,000
tons
China’s raw material supply pressure is
largely mitigated
China’s raw material source
kt
180
Import volume of crude tin for refining purpose
用于再精炼的粗锡进口量
160
Output of recycled refined tin
再生精锡产量
Import of concentrate
精矿进口量
140
Unreported mine output
未报告的矿山产量
120
Reported mine output *
报告的矿山产量*
100
80
60
*Reported output after
2013 (inclusive); the
official did not announce
mines’ output after 2013
40
20
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Data source: ITRI, CRU,CNIA
Significant increase of concentrate import
Import volume of China’s tin concentrate (material object)
中国锡精矿进口量 （实物量）
•
Mainly from Burma
•
Grade of 60%-70%
imported
concentrates is 10%;
and that of the rest is
20%-35%
•
Low price and
seasonable factors
caused a decline of
import value for
consecutive five
months
35,000
Myanmar Others
缅甸 其他
30,000
25,000
20,000
15,000
10,000
Jan-15
Oct-14
Jul-14
Apr-14
Jan-14
Oct-13
Jul-13
Apr-13
Jan-13
Oct-12
Jul-12
Apr-12
Jan-12
Oct-11
Jul-11
Apr-11
Jan-11
Oct-10
Jul-10
Apr-10
0
Jan-10
5,000
Significant increase of tin concentrate
output
China’s tin concentrate
output
ton
ton
Refined tin output
Data source: ITRI, CNIA
year-on-year growth
Slowing growth of China’s consumption
China’s tin concentrate
consumption structure, 2014
China’s tin consumption
ton
1%
9%
3%
4%
Solder
焊料
马口铁
Tinplate
化工
Chemicals
11%
Brass&
and
bronze
黄铜
青铜
Glass
玻璃
9%
63%
Lead-acid battery
铅酸蓄电池
Others
其他
China’s tin consumption
year-on-year change
Declining growth of electronic industry
Year-on-year growth rate of the output of main
electronic products in China
%
50
40
家用洗衣机
Domestic washing machine
30
家用电冰箱
Household refrigerator
20
Mobile telephone
移动通信手
持机
电子计算机
Computer-complete machine
整机
微型计算机
Microcomputer
设备
Colour TV set
彩色电视机
10
0
-10
Data source: State Statistics
Mar-15
Dec-14
Oct-14
Aug-14
Jun-14
Apr-14
Jan-Feb-14
Nov-13
Sep-13
Jul-13
May-13
Mar-13
Dec-12
Oct-12
Aug-12
Jun-12
Apr-12
-30
Jan-Feb-12
-20
New areas of demand are showing their
potential
Year-on-year growth of
consumption in all areas in the last
three battery
years
Lead-acid
•
In 2014, the new Access Conditions to
China Lead-acid Battery Industry started
to be implemented, which stipulates that
the tin content should be increased from
0.2% to 1.2%. The large scale lead-acid
battery market,
•
relatively low tin price increased the
market competitiveness of tin chemical
products, the turnabout of economy in
Europe and US drove a significant growth
of export of tin chemical products used
for building purposes.
Brass and bronze
Tin chemistry
Tinplate
Solder
•
A shifting relationship between
growth of LED and auto electronics
and the miniaturization of electronic
products;
There is still large inventory
ton
国内库存的变化
Domestic inventory change
15,000
13,000
11,000
9,000
7,000
5,000
3,000
1,000
-1,000
-3,000
-5,000
-7,000
-9,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
The trend of trade becomes subtle and depends
on interest margin between two markets
* *export volume predicted
ton
net import
进口
3,500
based on import of other
countries; the recent months’
data are incomplete export data
net export
口
3,000
2,500
2,000
1,500
1,000
500
0
-500
-1,000
Mar/15
Jan/15
Nov/14
Sep/14
Jul/14
May/14
Mar/14
Jan/14
Nov/13
Sep/13
Jul/13
May/13
Mar/13
Jan/13
Nov/12
Sep/12
Jul/12
May/12
Mar/12
Jan/12
Nov/11
Sep/11
Jul/11
May/11
Mar/11
Jan/11
Nov/10
Sep/10
Jul/10
May/10
Mar/10
-2,000
Jan/10
-1,500
Arbitrage space reappears and the import increase is
predictable
Domestic import price=LME spot price + 3% tariff + 17% VAT
Arbitrage
space
LMB spot price, USD/ton,
Domestic spot price, USD/ton
LME March futures closing price, USD/ton
Domestic import price*
Shanghai-Tin March futures closing price, USD/ton
Influence of tin futures listing on SHFE
Yuan/ton
Number of futures contracts
traded in March at SHFE
lots
•
Large price
fluctuating range
•
Open interest and
trade volume
expand quickly,
comparable to
LME daily trading
volume
•
The single-day
trade volume on
May 7 reaches
51604 lots! (1
lot=1 ton)
Influence of tin futures listing at SHFE
1. The domestic market’s investment and speculation
factors increase and the fluidity is speeding up
2. The domestic price fluctuating range is greater
3. Change of domestic pricing model
Bargaining pattern based on spot quotation
price+premium/discount？
Futures
4. Enhanced linkage between domestic and overseas
markets
5. Investment demands alleviate the inventory pressure
Market outlook
China’s supply and demand balance
forecast
2011
Ton
吨
Output
产量
Adjusted net export
调整后的净出口
China’s refined tin consumption
中国精锡消费量
Market equilibrium
市场平衡
2012
2013
2014
2015e
160,000 152,000 158,100 175,000 178,000
8,134 -11,835
359
4,729
2,000
156,700 149,700 156,400 162,700 167,800
-4,800 14,100
1,300
7,600
8,200
Data source: ITRI, China Customs, GTIS
2015 critical forecast matters
China and
Burma
China’s tin concentrate output was increased from
175,000 tons in last year to 178,000 tons this year, and
the mining quantity in Burma was increased from 30,000
tons to 35,000 tons.
Indonesia
The mining quantity was decreased from 86,000 tons to
78,000 tons, of which 73,000 tons were tin concentrate.
Other supply
quantities
Output in South America keeps stable (slight increase in
Brazil and Bolivia being set off by output decline in
Peru). Slight increase in Australia and Africa
Demand
Global tin concentrate consumption quantity was
increased to 367,300 tons, a growth rate of 1.7%.
China’s growth rate (+3.1%) is greater than other
regions of the world (+0.5%)
A predicted short supply (with high error
rate)
Table for global refined tin supply/demand balance
Forecast
(000 tons)
Global
Global refined tin output _
Selling quantity of DLA
Global refined tin consumption
Global market equilibrium
Report stock
LME
Manufacturer
Consumer and others
Total
Global sales-to-stock ratio
(weekly consumption)
Recent “generally consistent” tin price prediction (Reuters survey made
in April 2015)
2015=19,070 USD/ton
2016= 21,465 USD/ton
Complex mid-term viewpoint (1)
The mining industry and metal price will rebound strongly by 2019, while chemical fertilizer will lag behind*
34 mining industries, metals and fertilizers covered by CRU
Hot
Warm
Zinc, CPC, tin, nickel, coal tar, sulfuric acid, cobalt,
Palladium, bauxite, metallurgical coke, metallurgical coal, copper , potassium
carbonate
Aluminum, lead, platinum, thermal coal, phosphorite
ferrochrome, chrome ore, urea, crude oil and Brent crude oil
Mild
Lead , silicon
Cool
magnesium
Cold
Phosphate, DAP, ammonia, silicon-magnesium and gold
Froze
n
Metal, molybdenum, iron ore, sulfur and silver
Complex mid-term viewpoint (2)
Figure 4. Schedule for supply quantity of emerging raw material in urgent need on metal market
Next six
months
1-3
years
Zinc
Chrome ore
Nickel
Platinum
family metals
Bauxite
Copper
Metallurgical
coal
Iron ore
Silver
Thermal coal
Gold
Manganese ore
Lead
Steel
Ferrochrome
Aluminum
Tin
NB: Exceeding projects already putting into production
Data source: Macquarie research, May 2015
5 years
above
3-5
years
Uranium
Price outlook before 2023
USD/ton
60,000
Central
Forecastvalue
(2014)
Middle predicted
50,000
(2014)
Weak
demand
scenario
(2014)
Weakening
in demand
(2014)
40,000
Supply supply
constraint
scenario
Limited
quantity
(2014) (2014)
2020–2023
Predicted range:
20,000 -40,000
USD/ton
30,000
20,000
Latest
likely
path
The
mostmost
possible
path
recently
10,000
0
2007
2009
2011
2013
2015
2017
2019
2021
2023
No.1003, Jianwei Building, No.66, South Lishi Road, Beijing
Tel: + 86 10 6808 6625
E-mail: cuilin@itri.co.uk
WeChat ID: ITRIChina
Please scan the twodimension code below
to key an eye on
International Tin
Research Institute