Tin supply and demand in China

China is largest resource country of tin concentrate, the foundation reserves were 1,843

thousand tons, accounting for 24% of global reserves. The output of refined tin accounted

for 1/3 of the global output, and it is the main export country in the world. As Chinese

government took measures to restrain mining of tin concentrate, the production of refined

tin reduced. As WBMS revealed, the supply shortage of refined tin was 4,300 tons in 2008,

and the output of refined tin decreased 15.8 thousand tons to 334.2 thousand tons

compared with that last year, including 3800 tons of tin transaction from Defense Logistics

Agency. The total global supply was 338 thousand tons, while the demand declined by

4.2% to 342.3 thousand tons in 2008.

The rapid economic development of the world and China brings up the increase of tin

consumption, the apparent consumption of refined tin came to 113.1 thousand tons,

increasing by 32.1% compared with 85.6 thousand tons in 2004. The use expand of tin is

the main reason of the consumption increase. For example, many glass product lines

come on stream in China these years, and the consumption volume from tin groove

increased greatly. It is picking up the process of soldering tin.

The short supply slows down the pace of tin price decrease. Affected by dollars

appreciation and crude oil price decrease, base metals price went down greatly since July.

However, the reaction of 3-month tin on LME lagged comparatively, and then it began to

go down since mid-July, because the supply cannot meet the demand. The supply of

refined tin was less than the demand since 2008. As WBMS report revealed, the supply

volume was short of 8,400 tons from January to May, 2008.

The output of refined tin decreased sharply in China in the first seven months, 2008, which

picked up the supply shortage. According to data from the National Bureau of Statistics,

the monthly changes of Chinese refined tin output as follows: the output dropped by

13.4% in February, 9.7% in March, 10.5% in April, 16.2% in May, 4.4% in June and 30.5%

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in July. The dropping rate came to 13% in the first seven months. The output of China took

the important part in the global tin market, and the output accounted for 37% of the total

one. The output decline will worsen the tightness of tin supply in the world.

As the chart revealed, the monthly output of refined tin kept stable at 8-12 thousand tons

in 2008, and only reached 16 thousand tons in October, which decreased slightly

compared with the monthly output of 2007. The main reasons are that the Chinese

government takes the strict measures to restrain the invalid mining, leading to the

slowness of refined tin output. The global financial crisis caused the global economic

slowness, and moreover, owing to tin price decline to the production cost of many tin

plants, a large amount of tin plants were forced to reduce production even halted

production.

Chinese output of refined tin in 2008

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Month

Output

􀋄tons􀋅

The output decline and demand increase made China become to a net-importation

country. The output declined by 15.5% to 51,300t in the first five months in China in 2008,

which led to the exportation decline greatly. However, the demand volume increased by

11.2%, and it is rare that China became a net-importation country of refined tin. Some

imported raw materials need to be refined in China, which stimulated the rebounds of tin

price further.

As the demand from China keeps strong,tin price decline was limited in Chinese spot

market when nonferrous metals went down greatly. The daily highest average offer was

RMB162,500/t late July, then the price retreated to RMB154,000/t mid-August. The

dropping range was 5.23%, much lower than the range of 27.28% on LME. Since the price

on LME rebounded to RMB154,000/t on August 13th, tin price did not rebound or may

rebound in spot market.

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