(Reuters) -Tin prices have nearly doubled from a year ago and are on course for their biggest annual rise in over 30 years, stinging big users of the soldering agent such as electronics firms, utilities, solar panel makers and appliance manufacturers.
For automakers, which use tin in coatings, bearings, brake pads and batteries, the higher tin costs come on top of a semiconductor chip shortage and a spike in prices for aluminium and magnesium due to curbs on energy-intensive industries in China.
Tin, whose main use is as a solder, has outperformed other industrial metals in 2021, gaining over 90% on the London Metal Exchange (LME). It is on course for its biggest annual rise since trading was relaunched in 1989 here, four years after the collapse of the International Tin Council forced a suspension.
LME tin surged past $40,000 a tonne for the first time last week, while in China, the world’s biggest refined tin market, prices are up around 100% on the Shanghai Futures Exchange this year.
“There are few places in the value chain which are not feeling the pain of a higher tin price,” said CRU senior consultant Willis Thomas.
He added, however, that photovoltaics (PV) companies, which use solder ribbon to join solar cells, would likely be the most severely affected, since they have less opportunity to pass on added costs to their customers due to “red-hot price competition in PV panels.”
Cui Lin, chief China representative at the International Tin Association (ITA), estimates tin demand from the PV industry will rise to about 15,000 tonnes this year, versus only 8,000 tonnes in 2019.
“The stock keeps decreasing, which has affected the price quite dramatically,” she said.
Tin inventories in LME-registered warehouses slipped to their lowest since 1989 at the start of November and are currently at just 1,365 tonnes. ShFE stocks are near a five-year trough.
Chinese tin smelters have had to reduce output due to curbs on power consumption this year, although not to the same extent as aluminium and magnesium makers, while a host of other tin supply constraints have worried the market.
Repeated disruption to ore shipments from Myanmar due to COVID-19 containment measures has restricted refined tin output in China, which was nonetheless up 15.1% year-on-year in the first 10 months of 2021, according to state-backed research house Antaike.
Elsewhere in Asia, Malaysia Smelting Corp, the world’s third-biggest refined tin producer in 2020, declared force majeure on deliveries in June, while Indonesia is weighing a ban on tin exports from 2024.
“For tin specifically, supply disruption and low inventories have been the key theme for the last year,” said Tom Mulqueen, head of research at Amalgamated Metal Trading (AMT) Ltd.
The ITA estimates global refined tin consumption will grow 7.2% in 2021, after slipping 1.6% to 361,900 tonnes last year as the pandemic disrupted global industries.
However, in some ways life under lockdown has been a boon for tin.
“Tin demand benefited substantially from the rapid transition to home working,” Mulqueen said, pointing to higher spending on white goods and appliances that still use more tin-intensive circuit board technology, particularly in China, and demand for nonperishable goods packed in tinplate.
“As the global economy normalises after the pandemic, do some of those tin-specific pandemic drivers start to fade? I think that’s a key question and uncertainty for demand next year,” he added.
Tin set to be top performing LME metal in 2021 tmsnrt.rs/31n8NFB
Tin consumption (2020) tmsnrt.rs/3CgUkrr
Tight spot tmsnrt.rs/3DiHjOK
Tin backwardation tmsnrt.rs/3wOLKz2
China tin prices seen staying well above average through 2022 tmsnrt.rs/3rt7oIs
Reporting by Tom Daly; Editing by Gavin Maguire and Richard Pullin
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