Tin, an almost forgotten critical metal, is following a record-setting trail blazed this week by silver as it rises towards an all-time price high of $50,000 a ton.
Like silver, which is selling for more than $60 an ounce for the first time, tin’s driving forces are a combination of strong demand from the electrification of everything and a supply shortage.
Silver, best known for its use in jewelry, is finding new markets thanks to having the best electrical conductivity of any metal whereas tin’s high conductivity is boosted by its low melting point which makes it an ideal solder in circuit boards.
Tin being used to repair a circuit board. (Photo by In Pictures Ltd./Corbis via Getty Images)
Corbis via Getty Images
Sometimes described as the “glue” in electronics, tin as an investment has the added attraction of a supply shortage and much of what is available comes from high-risk countries such as Burma, China and Indonesia.
A simmering civil war in Burma has crimped supply from that country. China uses everything it can produce in its vast manufacturing sector, while Indonesian production is being affected by a government crackdown on illegal mining.
1000 Illegal Tin Mines Closed
More than 1000 small illegal tin mines have been closed this year by the Indonesian Government which is concerned about lost tax revenue as well as the environmental damage caused by the miners who extract tin from rivers and lakes.
Erosion of riverbanks was blamed in part for recent heavy flooding in parts of the country, killing an estimated 900 people.
Traditional tin mining in Indonesia. (Photo by Mahendra Moonstar/Anadolu Agency/Getty Images)
Getty Images
The environmental factor is also an issue for nickel; another metal produced in such large quantities by Indonesia that other countries have been forced to close mines.
Since the start of the year the tin price has risen by 37% to $39,884/t, including 10.7% over the past four weeks.
The latest price means that tin has already eclipsed a $35,000/t price forecast for next year by analysts at Fitch Solutions BMI and is close to last month’s $40,000/t forecast from Citi, an investment bank.
That Citi prediction was assigned a 60% probability of being reached, with a more interesting price of $50,000/t given a 20% chance of being achieved.
Bull Market Developing For Tin
The combination of rapid electrification which underpins demand for tin and unreliable supply could see Citi’s bull-market case for tin move into focus faster than investors might suspect.
If there is a significant increase in demand and supply remains tight, the record price of $47,800/t reached shortly after Russia invaded Ukraine in early 2022 could be overtaken later this year.