China’s bid to rein in exports roils aluminum stocks and prices
China’s cancellation of tax relief on exports has left the aluminum industry scrambling to assess the impact on supply flows.
Tin prices are due to extend their rally next year as top consumer China stocks up on the metal due to a recovery in demand for electronic goods.
The bulk of tin, making up nearly half of demand, goes into solder, used chiefly in the electronics industry to connect components.
The benchmark price of tin on the London Metal Exchange CMSN3 slid to $12,700 a tonne in March, the lowest level in more than a decade, as the coronavirus hit demand, but it had rebounded by 45% by early September largely due to recovery in China.
Demand was hit by the pandemic as factories closed but supply also declined
It has since slipped to around $17,500, weighed down along with other metals and stock markets by rising covid-19 cases, but analysts expect more gains late this year or early in 2021.
“As a result of this resurging demand, the tin market is set to remain in deficit until at least 2023. And as a result of this sustained deficit in our base case scenario, prices are set to return to about $20,000 a tonne in the short term,” Roskill analyst Adam Slade told a webinar this week.
Demand was hit by the pandemic as factories closed but supply also declined, with output from major miner PT Timah TINS.JK in Indonesia sliding 26% in the first half.
In recent months, the electronics sector has revived, with global semiconductor sales up 4.9% year-on-year in July.
Roskill forecasts world consumer electronics shipments will jump by 22% in 2021.
Strong demand, financial arbitrage and declining supplies have boosted Chinese refined tin imports, with tonnage during the first seven months of the year 11 times higher than the same period in 2019.
The Chinese buying along with rising demand elsewhere is due to send the market into deficit, Macquarie said in a note.
“We find enough reason here to adjust our supply/demand balance to account for some stocking this year and next. The resulting deficits look bullish for tin’s price in the next few years.”
(By Eric Onstad; Editing by David Evans)
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