In the first week of 2021, the London Metal Exchange (LME) three-month price of tin rose to $21,360 per ton. This marks tin’s highest trade since March 2019. At the moment, the price sits at $21,085.
This increase happened despite the impact the coronavirus pandemic had on the supply of tin, as key supplier countries of the metal have been affected greatly. However, according to the International Tin Association, even with a 6% approximate downturn in the demand of the metal, the world market recorded a 5,200-ton shortfall in supply last year.
The association forecasts that supply will recover in full this year, despite units of tin still being in short supply, especially on the London Metal Exchange.
Over the course of last year, registered stocks on the London Metal Exchange decreased by 74% to 1,860 tons. Currently, the stocks stand at 1,755 tons, with about half waiting to be loaded out from warehouses. This leaves only 945 tons available that can be traded. This has caused the exchange’s time-spreads to tighten.
The LME’s last monthly report shows that at the end of October 2020, available metal for potential delivery on the London Metal exchange was 590 tons. This is a sharp decline in comparison with the exchange’s shadow stocks, which reached nearly 5,000 tons in March, when Asian demand had been severely impacted by the coronavirus.
Squeezes in the exchange’s trade of tin reflect mismatched liquidity flows. However, the tightness experienced this time around coincides with signs of the physical market’s constrained availability.
According to Fastmarkets, over the first half of December 2020, physical tin premiums in the United States surged. America is dependent on imports, which left it vulnerable to the disruptions in shipping, container shipping in particular, resulting from the coronavirus restrictions. One participant in the market stated that no fresh shipments were expected in the country until March.
The U.S. is not the only country to be impacted by coronavirus disruptions, as similar freight issues affecting the movement of tin between Europe and Asia and in Asian markets as well.
Apart from the logistics problems plaguing the global supply of tin, filling the supply gap of tin worldwide is another issue. The task now falls to Indonesia, which is the biggest exporter and the world’s second biggest producer of tin.
While Indonesia had not experienced any significant changes as a result of the coronavirus lockdowns, PT Timah, the dominant producer of the refined metal in the country, decreased tin shipments and production after the price collapsed in Q1 2020 to $12,700. This reduction appears to have held, as Indonesian exports decreased by 3.6% to 59,100 tons last year.
However, many hope that the current price level of tin will incentivize an increase in the supply of tin from Indonesia this year.
London tin prices aside, Josemaria Resources Inc. (TSX: JOSE) (OTCQB: JOSMF), a British Columbia-based mining firm, is set to reap big from its mining property located in Argentina. The JOSE’s gold and copper mining project is estimated to remain productive for 19 years, with studies indicated it could take less than four years for the project to break even.
NOTE TO INVESTORS: The latest news and updates relating to Josemaria Resources Inc. (TSX: JOSE) (OTC: JOSMF) are available in the company’s newsroom at https://ibn.fm/JOSMF
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