Research agency Fitch Solutions Country Risk & Industry Research expects tin prices to remain under pressure over the first half of this year as the global economy continues to slow.

The agency maintains its tin price forecast for 2023 at $20 000/t, as a strengthening dollar places a cap on metals priced in the currency and the Chinese market continues showing slow demand after the country recovers from Covid-19 lockdowns instated last year.

The tin price averaged $30 959/t in 2022.

Based on weakening macroeconomic fundamentals and high levels of global inflation, the global demand outlook for tin has fallen substantially, while supply has remained consistent, Fitch Solutions explains.

For example, elevated levels of inflation have weakened consumer spending on electronics, which is a major source of tin demand.

Fitch Solutions anticipates that tin demand in the global consumer electronics market will lag behind this year, compared with 2021, given the high base rate of that year.

This softening demand does, however, provide some relief to chipmakers and consumer electronics companies as they battle supply chain challenges, though they will soon be keen to maintain order flows to sustain revenues amid rising costs of raw materials.

Fitch Solutions forecasts that refined tin consumption will grow by only 0.3% year-on-year this year, compared with 0.5% year-on-year in 2022.

Another factor influencing prices in the short term is that of tin inventories. Through 2021, low levels of tin stocks – driven by reduced output owing to Covid-19-related restrictions – helped to support the metal’s extensive price rally.

For London Metal Exchange (LME) stocks in particular, depleted levels pushed marginal prices higher, especially when they were near zero early in 2022.

The subsequent recovery in inventories, which Fitch Solutions has observed over the past months, will keep prices from any rapid rises and eliminate chances of strong rallies seen in 2022.

That said, Fitch Solutions adds, liquidity on the LME remains fairly low, which does mean that higher levels of volatility are likely to remain a feature of trading in the short term, at least.

Some of the upside risks to Fitch Solutions’ short-term outlook include a slower-than-expected ramp-up in refined tin supply from China, Indonesia and Malaysia, which could result in tin prices elevating higher than forecast in 2023. A significant crackdown on offshore mining in Indonesia, or an export ban on tin ingots, would also create upside pressure on global tin prices.

On the downside, further strengthening of the dollar and further weakening of global demand would force prices to lower than pre-Covid-19 levels.

In the long term, the agency expects tin prices to edge higher as demand increases and the market surplus narrows from 2024 onwards. Prices are currently still above historic levels and will continue to edge higher to reach $45 000/t by 2032, Fitch Solutions states.

It points out this is more than double the average tin price of $18 729/t between 2016 and 2020.

On the supply side, a thin pipeline of tin mining projects will tighten the tin concentrate market, leading to increased competition among smelters and constrained ore feed for refined output growth.

Fitch Solutions also expects global use of tin to increase rapidly through the metal’s use in electronics, particularly as electric vehicles are manufactured with increasing levels of electronics in their body, and as solar panels cement tin’s status as a commodity of the future.