LONDON- Rising refined tin output will cut the global market deficit next year and weigh on prices as new Chinese smelters ramp up and Indonesia also expands production, the International Tin Association said.
Benchmark tin prices have already been the worst performer on the London Metal Exchange this year, sliding 16 percent.
“The average price has declined quite significantly from last year and we would expect next year to also be quite a difficult year for tin,” James Willoughby, manager of market intelligence for the association, told a seminar in London.
Refined output is expected to increase by 5.8 percent to 352,000 tons next year while demand rises by only 0.4 percent to 353,900 tons, according to ITA forecasts.
That means the global deficit is forecast to fall to 1,900 tons in 2020 from 20,000 tons this year.
Willoughby, however, said the big deficit for this year may be revised down because producers are not thought to have stuck to cuts announced in September. The announced cuts amounted to about 30,000 tons, equating to about 8 percent of global supply.
“We have a significant deficit pegged for this year, but that assumes that refined producers stick to their production cuts,” he said.
“In Indonesia, we haven’t quite seen that as drastic as previously thought, so this is likely to change.”
Both mine and smelter production is expected to rise next year in major producers China and Indonesia, Willoughby said.
“There is quite a lot of (refined) capacity in the market already and this is only going to increase. Over the next few years this increase is estimated at about 80,000 tons,” he said.
Both the world’s top two producers – China’s Yunnan Tin 000960.SZ and Indonesia’s PT Timah TINS.JK – are expected to increase capacity, but there may also be consolidation because many smaller smelters are operating at less than 50 percent capacity, Willoughby said.
On the demand side, the picture was brighter for 2020 after a sharp fall in semiconductor sales this year. – Reuters