Global tin supplies will likely face problems later this year as Myanmar’s Wa region, which contributes 10 per cent to world’s supplies of the metal’s concentrate, has decided to suspend mining operations “until mature mining conditions are in place” from August.
This will buoy the prices of the metal, used as solder in circuit boards of the semiconductor industry, analysts say. “We expect Myanmar’s suspension of tin mining in the Wa region from August 2023 onwards to pressure global supplies and prop prices higher in the short to medium term,” said research agency BMI, a unit of Fitch Solutions.
Key Chinese source
According to the International Tin Association (ITA), Wa is a major tin mining district in Myanmar. It provides a significant portion of concentrate for China, the world’s largest refined tin producer.
In 2022, almost two-thirds of China’s imported tin-in-concentrate were from Myanmar, totalling 48,000 tonnes. About 40,000 tonnes of this came from Myanmar’s mine production with Wa contributing an estimated 70 per cent.
Tin prices are trading around $25,500 a tonne, off the two-month high of $28,000 witnessed on April 18 after news of the Wa region development.
On the Shanghai Futures Exchange, the tin June futures contract dropped to 197,450 Chinese yuan ($28,072) a tonne on Monday.
Tin prices have gained nearly 2.5 per cent in the past week. Currently, spot tin on the London Metal Exchange is quoted at $25,150 and the three-month contract is ruling at $25,075.
Output forecast lowered
ING Think, the economic and financial analysis wing of Dutch multinational financial services firm ING, said Myanmar’s largest ethnic armed group controls the tin-mining area. Myanmar has the world’s third largest reserves of tin, behind China and Indonesia. “China is particularly dependent on Myanmar tin ore,” it said.
BMI said, “We have revised downwards our forecast for Myanmar’s tin production, now expecting a decline of 30 per cent year-on-year (y-o-y) in 2023, decreasing to 28 million tonnes (mt) compared with 40 mt in 2022.”
The research agency expects slow growth for the medium term, averaging just 1.8 per cent y-o-y till 2032, amidst uncertainty over Myanmar’s political landscape and the Wa region’s stranglehold over tin resources.
In the medium term, Myanmar could look into domestic beneficiation of tin following a rising trend among emerging markets globally. “In the longer term, we expect Myanmar to remain a significant producer of tin in the region, although political uncertainty will add downside risks to production volume,” the research agency said.
Indonesia mulls export ban
The outlook for tin supplies has been compounded by Indonesia, the largest exporter of refined tin, considering a ban on exports to encourage downstream processing capacity building, BMI said
ITA said an additional 8,000 tonnes of tin came from Wa stockpiles last year when the metal’s prices rose to a record high.
It said a document on the suspension of mining gives the rationale for the move as a step to formalise mining. “... we might expect some restriction of supply until this is achieved. Mines with existing licenses will have three months to adapt to the new requirements,” ITA said.
Supply uncertainties come amidst global financial services firm Macquarie forecasting 5,000 tonnes market surplus with global demand being projected at 3,62,000 tonnes.
On the other hand, analysts see tin demand, especially from the semiconductor industry, being affected by economic slowdown and a cut in spending by consumers on electronic goods.
Supplies could increase from Peru and Congo and it could limit the impact of suspension of mining in Wa, analysts said.
In February, Fitch Solutions, now BMI, projected tin production in 2023 at 4,24,000 tonnes and consumption at 3,67,000 tonnes, leaving the market with 57,000 tonnes stocks.