Summary and analysis on 3-month tin price on LME in 2008

Annual Report on Tin Market

Tin metal is of low-melting point, innocuity and corrupt proof. Meanwhile, it can form alloys

with many other metals, has good tractility and specious characters. It is mainly used to

produce latten and tin alloys. Latten is the main consumption areas of tin, accounting for

about 30% of the total consumption volume. The material can be used as the containers

of foods and drinks, all kinds of packages, household appliances and the crust of battery.

In addition, latten is also used to common light project, model, toy, office appliances and

signboard of advertisement.

The other main use is to produce tin alloy, including tin solder, tin bronze, axletree alloys

and other alloys. The consumption of tin in tin solder areas has exceeded 30% of the total

volume, and about 75% of tin solder is used in electronics industries. The consumption

volume is increasing year by year.

Tin compound is also widely used in industries, and tin oxide is used as glaze dye and

light proof, industry activators and reducers. Tin chloridize is used as haircloth fire proof.

Tin sulphate is mainly used to tin electroplating, and tin compound is used to insecticide

and activators.

Since 2007, tin metal was the most dazzling star among nonferrous metals, and the price

has increased by 74.4% that year, much higher than the copper price with 27.8% increase

range. Both China and Indonesia will continue to retrain the invalid mining of tin ore,

leading to the tin output increase slowness. Meanwhile, the global financial crisis broke

out, and global economy became very slow. Especially the electronics industries were

disturbed strongly, and the consumption of tin reduced sharply. China has transferred

from net-export country to net-import one in the second half year, 2008, and moreover,

the demand became very low at that time, which sprained the enthusiasm of tin producers.

A large amount of plants were forced to reduce or halt production in order to keep tin price

stable. Therefore some plants still cannot run with a full capacity in 2009.

The fact is the supply volume will be in shortage in 2009, but it is difficult for tin price to go

up greatly in the first half year. Whether the purchase and storage policy will take effect or

not, and how the global economy will resume, will relate with the price fluctuation of tin

metal.

Tin price trend in 2008

Summary and analysis on 3-month tin price on LME in 2008

The future tin market in the first half of 2008 was completely opposite to the second half of

that year. The price on LME broke USD2,500/t, drawing near to USD2,600/t mid April,

which is the highest point in 2008. Then dragged by the release of some American

economic data, the prices of nonferrous metals all went down. More importantly, tin price,

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Asian Metal Ltd. All rights reserved. Tel: [phone]/33/44

which went up farthest that year, kept decreasing in the last whole week of May. The

3-month tin on LME was USD24,210/t on May 27. However, it decreased to USD20,195/t

on May30, down by 16.7% in three days.

Impacted by the slowing down of supply increase, the tin stocks on LME decreased by

4,550t totally after entering into 2008 and touched 7,550t late May. It dropped by 37.6%,

the biggest one among base metals. After the great decrease, the prices of base metals

on LME stopped to rebound, impacted by the movement of US dollars and the price

changes of crude oil, and tin price rebounded most powerfully. 3-month tin on LME

touched USD19,752/t on August19 from the bottom line of USD17,375/t on August13, up

by 13,68%. After entering into September, the price of the metal flowed down vigorously

depressed by the subprime lending crisis in America. Though it also rebounded slightly by

several times, the price dropped to USD11,000/t late October, down by 44.3% shockingly.

And in November, the Government of Yunnan Province issued that they would reserve

100,000t of tin ingot, which pushed up 3-month tin on LME to rebound greatly. It went

back to above USD15,000/t mid November. However, with the time passing by and the

demand keeping dull in both domestic and overseas markets, the future tin price

plummeted to USD10,000/t. It continued to go down and touched the roof of below

USD10,000/t before the Spring Festival. The future tin price dropped by 37.5% in the

whole year.

Large sums of capital have been invested into tin future market since 2008. The open

contracts of future tin on LME touched the high side of 21,556 copies on April23, up by

39.9% compared to the beginning of 2008. The deals of tin are the smallest one compared

to other five kinds of base metals. However, the great increase of open contracts pushed

up the fluctuation of tin price, and led to the sharp price increase and decrease. According

to the fundamental analysis, the recent price decrease of tin was not the sign of price

collapse but an adjustment after the crazy increase.

Asian Metal Ltd. All rights reserved. Tel: [phone]/33/44

Asian Metal Ltd. All rights reserved. Tel: [phone]/33/44

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