The tin market is poised for a fifth year of shortages as new rules in Indonesia curb exports, driving up costs for manufacturers of everything from tablet computers to televisions to telephones.
"Indonesia, accounting for 40 percent of global supply"
Tin prices more than tripled since 2005 as producers failed to keep pace with demand. Shortages started in 2010 and will continue into 2014, Barclays Plc says. Futures that climbed 8 percent last week will rise another 6 percent to $24,275 a metric ton on the London Metal Exchange by the end of the year, the median of six analyst estimates compiled by Bloomberg shows.
I think that there is only one way for the price of tin to go UP.
October 11, 2013
The tin price is on the move and seeing a resurgence - as the tin market remains supply constrained due to growing demand and falling production, and there are some Australian Stock Exchange listed tin companies poised to benefit.
Tin is currently fetching around US$23,500 a tonne (A$25,000) - which is already up over 10% from its August-2013 lows.
Demand for tin comes from the electronics industry, with more than 50% of sales used in solder for circuit boards - which power consumer’s insatiable appetite for smartphones and tablets.
The metal is also a key ingredient for packaging food.
A key catalyst for the tin price to gain is the latest decision by the world's biggest exporter Indonesia, to cut shipments by close to 90% last month.
Over a longer period, Indonesian refined tin shipments are expected to drop by around 75% in September-December from the same period last year.
The rules, which aimed to establish a benchmark price in Indonesia, have already driven the nation’s biggest tin producer, state-backed PT Timah, to halt shipments and declare force majeure.
With this in mind - tin buyers have pre-empted the governmental change and increased tin holdings, but these are only expected to last for a couple of months - with a shortage of tin potentially having ramifications in the electronics industry.
2013 tin forecast
The 2013 global forecast for tin has consumption at 340,000 tonnes, while global refined tin production is 339,000 tonnes, and global mine production is 274,700 tonnes.
Currently China is the world's largest producer with 160,000 tonnes annually, followed by Indonesia 55,000 tonnes, Malaysia 31,000 tonnes, Thailand 21,000 tonnes and Peru (mostly San Rafael mine-closing 2017) 23,000 tonnes.
ASX tin plays to fill void
There are some Australian Stock Exchange listed companies set to potentially fill this void.
Consolidated Tin Mines (ASX: CSD) remains on track for first tin production in northern Queensland in the second half of 2014.
Consolidated Tin has some impressive metrics, and at a base case of tin priced at A$24,000 a tonne, the company's Mt Garnet project would deliver an internal rate of return (IRR) of 111%, with a LOM cash surplus, before tax of A$378.5 million.
A higher tin price would further improve these metrics, with the company also having sovereign security on its side.
Steller Resources (ASX: SRZ) is another tin play to watch, with the company's wholly-owned Heemskirk tin project in Tasmania the highest grade undeveloped ASX listed tin resource.
Positive metrics include a competitive mine gate cost of US$14,389/t from the Pre-Feasibility Study.
Adding value to Steller, Heemskirk can get much bigger with discoveries at depth, and the best analogy for Heemskirk is Rension Bell - located 18 kilometres to the northeast.
Metals X Limited (ASX: MLX) is Australia’s largest tin producer and holds a pipeline of assets from exploration to production, including the Renison Bell Tin Mine (50% MLX ).
Niuminco Group (ASX:NIU) is also heading into the tin sector, after today declaring its takeover offer for tungsten and tin explorer TNT Mines in Tasmania free of all defeating conditions.
Kasbah Resources (ASX: KAS) has tin interests further afield in Morocco, which has already attracted strategic partners such as Nittetsu Mining Co. Ltd and Toyota Tsusho Corporation of Japan.
Kasbah's Achmmach tin project is targeting first tin production in 2015, with a Definitive Feasibility Study into the development of a 1Mtpa underground mine, concentrator and associated infrastructure at Achmmach is proceeding.
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