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Markets // Market Analysis

ITRI forecasts market deficit despite drop in tin demand

Thursday, 26 November 2015

ITRI analysts forecast that the global tin market will remain in deficit in 2015-2016, despite a decline in demand this year. This has been identified in a major new survey of tin users, the results of which have been released at the 5th ITRI London Tin Investment Seminar today. 148 companies took part in the exercise, accounting for more than 46% of estimated total world refined tin use last year – close to the highest participation rate ever achieved in surveys carried out over the past eleven years.

The evidence collected points to a contraction in demand, which probably started in the latter part of 2014 and has accelerated in recent months. ITRI now believes that global refined tin use will fall by a little over 3% in 2015 and is likely to remain at about the same level in 2016. The dominant negative factor in 2015 is the slump in China's solder industry. Companies surveyed in this sector reported an average estimated decline in refined metal use of some 6%, but we believe that non-participating companies have suffered more. Outside China companies taking part in the survey on average estimate that their tin usage will be stable or increase slightly this year. On balance they forecast further growth in 2016, notably in solder and chemicals.

The results of the tin use survey have been combined with ITRI's latest estimates and forecasts of tin supply. While consumption is expected to fall by 3% this year, world tin production is likely to decline by around 8%, both in terms of refined metal and mine output. This will result in forecast supply deficits of some 6,000 tonnes in 2015 and 10,000 tonnes in 2016.

Commenting on the survey, ITRI's Markets Manager Peter Kettle said "The tin market has been in deficit for 8 out of the last 10 years and it appears likely that structural deficits will continue in the near future. Looking further ahead we see the possibility of a new growth spurt in tin use, most probably driven by existing and new applications linked to energy conservation and storage. However this needs to be matched by investment in sustainable new supply sources which is unlikely to be forthcoming at current price levels."

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