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Tin in the News
LME tin has traded in a particularly narrow range of broadly $21,100 to $21,300 over the last month. We note that the price volatility during December, (calculated as the standard deviation of the daily 3-month tin price) was the lowest since November 2013. However, tin moved into contango on Wednesday for the first time since 19 September, suggesting that the supply tightness seen outside China during Q4 has lessened somewhat in the first weeks of January. This first "Tin in the News" of the year includes a summary of 2016 totals for Indonesian exports and Bolivian state-smelter production during 2016, as well as our insight on the subject of the potential scrapping of China's 10% duty on refined tin exports.Tom Mulqueen - Manager, Markets |
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Future of China's tin export duty uncertain
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13 January: China's 10% duty levied on refined tin exports has not been referenced in the country's recently released 2017 Exports Commodities Tax Rates Table, leading many experts to conclude that the duty has been scrapped altogether, although no official announcement has yet been made to this effect.ITRI China has contacted a number of companies, including brokers, producers and other experts, in an attempt to verify the cancellation of the duty. Whilst most believe it has been scrapped, no one has been able to verify this with 100% certainty because of the absence of any official announcement or documentation. ITRI's view is that the duty has been cancelled, but we suspect the situation may not become any clearer until after China's Spring Festival.China started to impose the 10% export duty on refined tin from 2008. It has since changed China from a net exporter to a net importer, also helped by the increasing demand for refined tin within China. Any change to the duty would be in the context of the ongoing World Trade Organisation (WTO) challenges to China's export duties on tin and other raw materials. These were launched separately by the USA and EU in July last year, who both argued that they were anticompetitive. Chinese representatives have rejected the challenges, arguing that the duties were in line with WTO rules and designed protect the environment.ITRI View: We expect that the removal of this barrier to trade will have global significance, as more tin ingot might be expected to flow into the international market, particularly given the substantial oversupply in China's tin market in recent years. A closer alignment between the LME price and China domestic tin price might also be expected, due to increased opportunities for arbitrage trading.
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Vinto output rises in 2016
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12 January: Bolivia's state-owned tin smelter, Empresa Metalúrgica Vinto (EMV), has reported increased refined production of 13,111t during 2016, up 8.3% compared to the previous year, according to local news sources.The figure was reported by EMV's CEO, Ramiro Villavicencio. Last year was the first to see full operation of the company's Ausmelt furnace, which was commissioned in September 2015, hence an increase in output was expected. However, the reported increase has fallen short of the official target of 14,000 tonnes.Bolivian Mining Minister, Cesar Navarro, has explained that the shortfall was primarily a result of lower concentrate supply from the Huanuni tin mine, which is also owned by the state mining company, Comibol. A drought in Q4 resulted in a shortage of water available at Huanuni, both for drilling within the mine and for processing at the dressing plant, resulting in lower concentrate output.ITRI View: The long-term target for production from Vinto is 18,000tpy of refined tin. However, the ability of EMV to meet this target will be influenced far more by the availability of concentrate and its suitability for the Ausmelt process than by changes and improvements made at the smelting plant. However, despite the disruption to tin mining due to last year's drought, our medium-term outlook for Bolivian tin mining remains positive, with a new plant at Huanuni yet to enter operation and funding committed for a new ore processing plant at the Colquiri tin-zinc mine, also owned by Comibol. Official 2016 production figures for the two state-owned mine are expected in due course.
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Indonesian tin exports low in November
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6 January: Indonesian tin exports in December amounted to 6,051 tonnes, some 24% high than in the previous month, according to preliminary figures released by the trade ministry last week. Reported figures for 2016 totalled 63,559 tonnes, down by 9.4% compared to the previous year.The latest figures are based on pre-shipment checks made by surveying companies and include 26 tonnes of tin solder, as well as refined metal ingots. They are consistent with the December trading volume on the ICDX, through which all refined tin export sales must be conducted, of 5,980 tonnes.ITRI View: The lower shipments in 2016 were largely a result of stricter enforcement of Indonesia's tin sector by the Central government in the second half of 2015 and early 2016 which saw operations cease at a number of mining areas and smelters. Flooding also disrupted production from Bangka Island earlier in the year. Underlying these factors is the long-term trend of decline in Indonesian production as tin resources have depleted and tin grades have fallen. We expect stricter government enforcement of regulation and long-term grade decline to continue to be a downward pressure on tin production and shipments this year. However, this is likely to be offset somewhat by the higher tin price, which should incentivise mine production. With these factors in mind, we expect officially reported Indonesian refined tin shipments this year to remain broadly level with 2016.
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