Tin price nears $32,000 per tonne on demand for technology, renewables - Fastmarkets

Nov 05, 2024

On April 10 this year, the price of tin reached an intraday high of $33,130 per tonne, its highest price since it reached nearly $32,400 per tonne on June 16 two years earlier.

The global economy is being shaped by two major trends: the shift from fossil fuels to renewable energy, and our growing dependence on computer power.

The price of tin looks likely to benefit from both because the soldering metal is a vital component in the circuit boards, computer semiconductor chips and solar-power panels that these trends require.

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Forget out-of-date usages such as tin cans. More than 50% of tin production today is used for the soldering of electrical components and computer processors. Tin’s special qualities – it melts at low temperatures, is easy to pour into intricate shapes when molten, and is a great conductor of electricity – make it the solder of choice for the world’s gadget-makers.

Every electronic device you use, from your smartphone to your TV’s remote control, contains tin. The use of tin for soldering is nothing new but, with technical gadgets becoming more sophisticated, they incorporate more chips, and that requires more tin.

For example, the current Apple iPhone 15 model uses far more tin than the simple Nokia portable phones that were common 20 years ago.

And it is not just smartphones that use more microchips. The increased power and availability of computer processors, combined with their falling cost, means that they are being included in almost every household appliance.

Formerly ‘dumb’ white goods, such as refrigerators and washing machines, are now being made ‘smart’ with the addition of computer processing power. This means that more chips are needed, and this will further boost tin demand.

Another technological factor that will bolster tin demand is the use of artificial intelligence. The development of AI equipment requires the use of specialized semiconductor chips – graphic processing units (GPUs) – which use tin as both a solder and as anti-corrosion protection within circuit boards.

Investment adviser UBS estimates that the ChatGPT ‘chatbot’ application used around 10,000 GPUs in the development of an AI model, while demand for GPUs grew by 24% in 2023. GPU consumption is expected to continue to increase with more companies developing new AI models.

Tin will also play a major role in energy transition. The shift from the use of fossil fuels to electric power will require the building of more electric-related infrastructure.

For example, wind power plants can occupy 300 times more space to generate the same amount of power as a gas-fired power station. All the electric infrastructure required to link these widespread units to the power grid needs more microchips and circuit boards, which will be good for the price of tin.

But tin also has some very specific uses in the renewable energy sector. For example, solar panels are formed of many individual solar cells, which are connected by a “solar ribbon” of copper wire coated in a layer of tin.

Electric vehicles (EVs) are another area of tin demand growth because they use three times as much tin as a conventional car. The amounts are relatively small per vehicle – 4kg of tin for an EV compared with 1.2kg for a conventional vehicle – but they add up when producing vehicles in volume.

Tin is also found in batteries. It is used in traditional lead-acid batteries, which account for 7% of total tin consumption, and in the lithium-ion batteries used in smartphones and EVs.

The price of tin will also benefit from the push to eliminate lead from solder alloys. The EU already restricts lead use in solder, and it is due to be completely phased out by 2030.

“A global alignment to the 2030 EU standard could add a further 20,000 tonnes per year to demand [for tin] by 2030,” Julian Kettle, senior vice president of metals and mining at analyst Wood Mackenzie, has said. “But even before such legislation is enacted, electronics manufacturers are already ‘voting with their feet’ in adopting lead-free solders.”

Fastmarkets most recently assessed the tin 99.9% low lead ingot premium, in-whs Rotterdam, at $750-1,000 per tonne on April 2, compared with a high of $2,500-3,000 per tonne on August 24, 2021.

The tin market started this year in surplus but political challenges in major tin-mining countries could have effects on supply.

In recent years, civil unrest has increased markedly in Peru, the world’s second-largest tin producer, with disturbances frequently affecting mining operations and related infrastructure. Bolivia is the world’s fifth-largest tin producer and, like Peru, has a former president in jail, while the latest incumbent struggles to quell widespread discontent.

Indonesia, the world’s third-largest producer of refined tin, has several times threatened to ban tin exports, creating further supply uncertainty. And in Myanmar, which is responsible for around 10% of global tin supply, the majority of tin output comes from an autonomous region that is subject to internal conflicts.

At present, the global tin industry produces 380,000 tonnes per year of primary refined metal. But the International Tin Association (ITA) believes that a further 50,000 tpy of tin production must be added every year between now and 2030.

Such buoyant demand, coupled with uncertain supply in a relatively small market, will necessarily lead to price volatility. The LME 3-month tin price reached a record high of $51,000 per tonne in March 2022 before falling back to a low of $17,350 per tonne in November of the same year.

“Tin has the perfect recipe for the bull run to continue beyond our previous [price] target of $29,500 per tonne,” Fastmarkets analyst Andy Farida said this week.

“Not only has the supply side since 2024 fueled the move higher [in price], but improving demand from the semiconductor [sector] is giving the bulls a much-needed boost,” he added.

“Funds positioning on the LME has been very bullish,” Farida said, “[and is] near the high of March 2022, when tin was trading at its record high. With funds bullish, there is enough support for the uptrend to continue for now.”

To understand the complex market conditions influencing price volatility, download our monthly base metals price forecast. Get a free sample.