'Tense' volatility to persist in tin, 2021's best-performing base metal: LME seminar

Tin has been the best-performing base metal this year in terms of prices, which have near-tripled since the pandemic low to reach records late September, Tom Mulqueen, head of research, Amalgamated Metal Trading, told the London Metal Exchange seminar Oct. 11.

The tin market is now in backwardation and can be expected to continue being vulnerable to supply disruptions because it is a small market, Mulqueen said.

The LME's official tin price stood at $36,925/mt Oct. 8, slightly down from $37,600/mt Sept. 29.

"Tin is back on the LME Week agenda," Mulqueen noted. "We forecast extreme short-term volatility to persist and price to be $25,000-$30,000/mt by end-2022 but in the long-term, trending upward," Mulqueen told the seminar -- a hybrid in-person and virtual event. The rally may be a little more moderate moving forward, after recent "tense" volatility, he said.

Tin's strong prices are a result of bright and sustainable long-term demand prospects due to growth from the electronics sector and the increasing use of electronics in electric vehicles, the analyst said. "There's a long-term positive story for tin," he said.

"The tin project pipeline is thin ... We need time for new projects to come on stream," said Mulqueen, noting that most new supply in the short term may come from artisanal mining, and there are also opportunities for recycling. "Scarce" inventories on the LME and the Shanghai Futures Exchange also mean the market has limited capacity to absorb shocks, according to the analyst.

Over the past 10 or so years, former important producing sources in China and South America started to stagnate and in 2010, Myanmar became a major new source of tin in the market, fulfilling a supply gap, while supplies have fluctuated from Indonesia and Malaysia, Mulqueen said.