Friday, July 15, 2011

peak tin: solder is 60% tin and 40% lead...,

DeclineofEmpire | Tin Production — A Classic Case Of Limits To Growth

The tin production story is out there is in plain sight, but only those directly involved in supplying the tin ore, refining it, consuming tin metal or trading commodities are paying any attention. Bloomberg's Bear Market in Tin Ending as Shortages Mean PT Timah’s Profit Advances 55% explains what's going on now, and what's been going on for years now—Erfandi’s fleet of bamboo rafts are dredging 33 percent less tin ore from the rivers of Indonesia's Bangka Island than in 2008, as miners fail to keep pace with consumption that jumped 14 percent in two years.

The vessels operating in the world’s largest exporting nation are hauling up no more than 40 kilograms (88 pounds) of ore daily, from 60 kilograms, as reserves get depleted, said the 46-year-old foreman. Miners from China to Peru are also struggling to meet demand for the metal, used to solder components in almost all electronic equipment...

The market will be in deficit for the fourth time in five years, Barclays Capital says...

Prices climbed 51 percent to $26,185/ton in the past 12 months on the London Metal Exchange [price chart 2000-present, above]

The market is “critically dependent” on exports from Indonesia, Peru and Bolivia, said Edward Meir, a senior analyst at MF Global Holdings Ltd. in Darien, Connecticut. Output from the two South American nations may drop to a combined 48,000 tons this year from 51,100 in 2010, CRU estimates. Indonesian supply may increase “slightly,” ITRI forecasts.

The average metal content of ore is declining because richer deposits are now exhausted, Mohd. Ajib Anuar, group chief executive officer of Malaysia Smelting Corp., the country’s biggest producer, said in an interview in January. Mining companies are removing twice as much waste as they did two decades ago to get to the ore, he said.Lest you think this is a temporary dislocation in the tin market, let there be little doubt that tin is supply-constrained and has been for some time. Stuart Burns wrote Tin — Driven By Fundamentals in August, 2010.

Peak Tin
Tin has supply constraints
and yet along with all base metals demand has come back relatively strongly last year and this. Consequently, exchange inventories have dropped and the price has risen. Tin has the best fundamental prospects of all the base metals and will be the first to reach a new all-time price high, Stephen Briggs, metals strategist at BNP Paribas is quoted as saying in a Financial Times article.

Briggs went on to say, “World tin mine production peaked as long ago as 2005. A further decline in Indonesia, serious supply constraints elsewhere and only small sources of new supply suggest that mine output will at best be flat in 2010. It may grow by just 4% in 2011, with little further progress in 2012”. Indonesia’s problems do not appear to be getting any better in spite of significant investment in the development of offshore placer deposits, production is not markedly up.
More recently, Michael Montgomery, writing for Tin Investing News, explained what's going on in Tin Prices At Historic Highs on Supply Deficit.
Currently, the price is well above the pre-crash highs of 2008. The driving force behind the rise in value is simply the tight supply of the metal, and the increasing use of tin as a substitute for lead in solder for electronic equipment...

Supply side tightness and a lack of new production will continue to be the drivers of the tin market in 2011. These issues will not be resolved in the short term, and may continue for quite some time.

Indonesia has stated that it plans to cap tin production at 100,000 tonnes, leaving only 10,000 tonnes to grow from the predicted 90,000 output this year. With China capping production as well, supply deficits may continue over the next few years.

Indonesia would not cap production unless they were planning to conserve their depleting reserves to milk them for all they're worth over the long run.

What about the demand side? Bloomberg tells the story—
Solder represents 52 percent of demand and tinplate 17 percent, according to ITRI Ltd., a St. Albans, England-based researcher. The metal is used in electronic goods and a high proportion of electrical appliances, ITRI said.


umbrarchist said...

I love the smell of solder in the morning.

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