The Unstoppable Rise of Tin in a Faltering Market

Tin's Resilience Amidst a Faltering Metals Rally: A Deep Dive into Market Dynamics

Editorial Team (ET)May 9, 2025

The London Metal Exchange (LME) Index hit a two-year high in May when funds surged into base metals, chasing a narrative of manufacturing recovery, super-charged energy transition demand, and constrained supply. However, the rally lost steam in June, revealing underlying market complexities. Amid this shift, tin has stood out, outperforming other base metals by a significant margin.

The Base Metals Rally in May

May was a landmark month for base metals. Prices soared as investors bought into the story of a manufacturing recovery and heightened demand due to the energy transition. Copper, often referred to as "Doctor Copper" for its diagnostic ability to gauge economic health, reached an all-time high. The ferocious squeeze on the CME contract underscored the intense market activity.

Investor Interest in Metals

As the metals complex returned to the investor spotlight after years of neglect, both gold and silver saw substantial gains. The renewed interest in metals was driven by their potential as hedges against inflation and as key components in the green energy revolution.

June: A Turning Point

The exuberance of May was tempered in June. The base metals rally faltered as high inventories and soft demand in China, the world’s biggest metals user, came to the fore. The LME Index dropped 10% from its late May highs, reflecting the market's recalibration.

Tin: The Outperformer

Amidst the broader retreat, tin has proven resilient. Trading around $33,250 per ton, tin is up by 31% since the start of the year, significantly outpacing other base metals. This performance is particularly noteworthy given the broader market downturn.

Fund Activity and Speculation

Speculative money has played a crucial role in tin's price resilience. In April, fund long positioning stretched to 3,781 contracts, the highest since the LME launched its Commitments of Traders Report in 2018. While funds reduced long positions in other metals in June, they maintained their bullish stance on tin, with 3,726 contracts held at the close of last week.

Inventory Dynamics

Inventory levels offer key insights into market dynamics. Overall LME inventory rose from 1.16 million to 1.79 million metric tons in the first half of the year. Much of this increase was due to a surge in aluminum stocks in May. However, LME tin stocks fell by 38% to 4,750 tons over the same period, highlighting a stark contrast.

ShFE Inventory Trends

The Shanghai Futures Exchange (ShFE) inventory levels also provide valuable context. While LME stocks fell, ShFE tin stocks were higher at 15,127 tons but have been sliding, down 15% from their May peak. This decline reinforces the bullish narrative for tin, despite higher initial stock levels.

Supply Constraints in Base Metals

Supply constraints are a common theme across base metals. Copper and zinc, for example, have faced raw material tightness, contributing to their strong performance earlier this year. However, new and reactivated smelter capacities have mitigated immediate tightness in refined metal output, leading to more complex market dynamics.

Tin’s Supply Issues

Tin’s supply challenges are more immediate and pronounced. Indonesian shipments, the world’s largest exporter of refined tin, have been severely disrupted by licensing backlogs. Exports from Indonesia slumped to 10,292 tons in January-May, a significant drop from 23,887 tons in the same period last year.

The Role of Supply Disruptions

These disruptions have had a tangible impact on the tin market. Reduced flows from Myanmar, a major supplier of tin concentrates to China, have exacerbated the supply squeeze. The ongoing audit initiated by Myanmar authorities in August last year has further slowed shipments, leading to a 27% year-on-year decline in Chinese imports.

Impact of Reduced Concentrate Flows

The decline in concentrate flows from Myanmar has forced Chinese smelters to draw on exchange stocks, adding to the market tightness. This dynamic has set tin apart from other base metals, where supply issues have not translated as directly into refined metal shortages.

Indonesian Refined Tin Exports

Indonesia’s export woes have had a ripple effect across the global tin market. Licensing delays have curtailed outbound volumes, creating supply gaps that have pushed buyers towards exchange stocks. This supply-side pressure has kept tin prices buoyant even as other base metals have stumbled.

The Future Outlook for Tin

Looking ahead, tin's market performance will hinge on resolving current supply issues. The Indonesian government's ability to streamline licensing processes and the outcome of Myanmar's audit will be critical. Investors will also keep a close watch on inventory levels and any signs of increased demand from the electronics and renewable energy sectors.

Conclusion

Tin's exceptional performance amid a broader base metals downturn underscores its unique market dynamics. Supply disruptions in Indonesia and Myanmar have created a tight market that has supported prices. As investors navigate the complexities of the metals market, tin’s resilience offers valuable insights and potential opportunities.

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