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Tin in the News
After trading sideways in the $21,000 - $21,500 range since early December, LME tin has finally made its move, falling to below $20,000 on Monday before recovering to around $20,200 yesterday. We suspect the price decline was driven by a number of factors, including the lack of market direction since December, an LME warehouse delivery of 520 tonnes into Singapore on Monday and bearish sentiment regarding the non-renewal of China's 10% tin export duty. We expect trading will be slow in the next couple of weeks during the Chinese New Year holidays.In this week's news, we summarise output of the major refined tin producers in 2016. Also covered is China tin import data for December and contents of a recent publication by rating agency Fitch, who have re-affirmed Minsur's credit rating.Tom Mulqueen - Manager, Markets |
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The top 10 refined tin producers of 2016
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25 January: ITRI reports that four of the top ten refined tin producers saw output rise in 2016, while six saw a decline, including half of the top four companies. The data was reported directly to ITRI, with augmentation using published information.Of the four Chinese companies included in the top 10 table, two saw production fall in 2016, one reported a large increase and the other a negligible increase. China's mine and secondary refined tin production both fell last year, but this was more than offset by a 30% rise in the supply of tin in ore and concentrate from Myanmar. China's refined tin production is expected to increase marginally this year; a recovery in mine output and secondary refined tin production should compensate for lower shipments from the Wa County mining district in Myanmar as grades fall and costs rise.In Indonesia, PT Timah saw a 13.4% fall in refined tin production to 23,756 tonnes (unaudited) in 2016. Production was affected by lower raw material availability as a result of reduced mine output. In turn, this was driven by the low tin price and flooding on the island of Bangka in the early part of 2016. PT Timah has since raised the price they are willing to pay for ore, which incentivised mining in the latter part of the year and should continue to do so in 2017. Despite higher prices, Indonesian tin production continues to face pressure from depleting resources and falling tin grades. On balance we expect Indonesian tin output will remain broadly unchanged this year.Refined tin production by Minsur in Peru contracted by 3.2% to 19,583 tonnes in 2016 as a result of the continuing natural decline in tin grades at the company's San Rafael Mine, although this was somewhat offset by the commissioning of a new ore sorting plant last May. Also, Minsur's Brazilian operations saw a 4.8% increase in refined tin production to 5,873t. Minsur's total refined tin production should remain broadly stable in 2017, as a likely increase in Brazilian production from Brazil offsets any further decline in Peru.The Bolivian state-owned smelter, Empresa Metalúrgica Vinto, saw refined tin production rise 8.3% to 13,111 tonnes last year, short of the 14,000-tonne target announced in early 2016. It was reported locally that the target was missed due a drought in the latter part of the year that disrupted mining, particularly at the state-run Huanuni mine, therefore limiting the supply of tin concentrates to the smelter.
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China ore and metal imports both up in December
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January 24: Latest China customs data shows a rise in tin ore, concentrate and metal imports in December. The gross weight of ore and concentrate imports in the final month of 2016 was 46,538 tonnes (estimated 5,400t contained tin), up by 5% compared to December 2015, while tin metal imports for the month rose 44% year-on-year to 1,692 tonnes.The flow of raw materials continues to be dominated by border trade with Myanmar's Wa County, which accounted for 98.8% of ore receipts last month. Supply from Myanmar in 2016 totalled 472,506 tonnes gross weight or an estimated 57,000t tin. Almost 18% of this is believed to have come out of the Wa government's stocks, with the tin content of output from the Wa mining district estimated at 50,000 tonnes last year.China's imports of tin metal in 2016 totalled 10,088 tonnes, down 2% from 2015. 84% of tin metal imports during December came from Bolivia and Myanmar, at 801t and 628t respectively. While the higher than usual imports of Bolivian tin reported since September have continued through to December, the imports from Myanmar are unexpected. While a 1,000tpa capacity tin smelter operates in the south of the country near Yangon, production from the plant over the last 20 years has been considered to be negligible. Therefore, we believe the imports most likely represent sales of tin metal stocks held in the country. China's refined tin exports for the year totalled 736t, up 31% from 2015, while the sales of tin products not subject to the 10% export duty jumped 15% to 5,414t over the same period.ITRI View: In 2016, tin shipments from Wa were boosted by processing of above ground ore stocks and sale of government stocks, while the true mine output has fallen due to rising costs and falling tin grades. We anticipate the tin content of ore and concentrate shipped from the area to remain stable at 50,000t this year. With the non-renewal of China's 10% duty on refined tin exports, we also note the potential for higher refined tin exports from China in 2017, although the extent of this will be dependent on the price differential between China and the rest of the world.
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Fitch maintains Minsur credit rating
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January 24: Minsur's tin production from its operations in Peru and Brazil is forecast to increase from some 26,000 tonnes in 2016 and 2017, to around 30,000 tonnes by 2019, in a new analysis published by Fitch Ratings earlier this month.Fitch re-affirmed a BBB- rating on Minsur bonds, with a stable outlook. In the release, Fitch noted the continued low cost of production in Peru, that the "long-term fundamentals for tin remain sound" and "the recent trend (at the San Rafael Mine) indicating higher levels of reserve replacement than ore mined."Both Fitch and ITRI expect Minsur's total refined tin production to remain stable at around 26,000t in 2017, while recognising the potential of the company's B2 tailings project in Peru to boost production to 30,000 tonnes by 2019, assuming the project remains on schedule. The company's new $20 million optical ore sorting plant in Peru was commissioned last May and its utilisation in processing low-grade ore stockpiles was significant in lowering operating costs and sustaining output during 2016. The depletion of these stockpiles by early 2017 will likely result in higher operation costs this year, although the ore sorter will continue to support production by improving tin recovery of run-of-mine material.ITRI View: ITRI estimates that total refined tin production by Minsur in Peru and Brazil was the 3rd highest of any company last year. The decade-long trend of declining production and falling tin head grades from the main mine operation at San Rafael represent the biggest downside risk for Minsur's tin production looking forwards. However, initiatives in Peru such as the new ore sorter and B2 tailings project provide strong upside potential, while the output from the Pitinga Mine in Brazil is set to recover after power problems at the site last year.
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