mpw on tin

Encouraging words from Macquarie Private on the Tin outlook, released on 17 May 2011.

Concerns have been raised about risks to tin demand from substitution incentivised by high prices. However, tin use in making solder alloys is price inelastic in the short to medium term because solder alloys account for only a small fraction of the cost of consumer electronics, and there are no simple substitutes for solder alloys or for the use of tin in making solder. Moreover, major electronics manufacturers have substantial capital invested in existing production processes. Some applications in the chemicals sector may be vulnerable to some substitution but we do not expect it to happen on a scale sufficient to reduce world tin demand overall. We expect the tin market to remain in deficit and prices to reach new records in 2011-2012.

Be patient people. KAS has held up extremely well around these levels considering the market turbulence. In my opinion, our patience will be rewarded nicely over 2011-12.