A combination of demand-side factors caused a major decline in prices in past months and will continue to pressure prices in H123, the analyst notes, adding that worsening economic indicators and elevated levels of inflation mean weaker consumer spending on electronics, a major source of tin demand.
Fitch’s forecast reflects continued weaker demand over 2023 and slight improvements in supply as mining and smelting operations are more fully normalised across the market. The analyst’s consumer team expects that short-term demand in the global consumer electronics market will lag behind that of 2021 given the high base rate and the loss of momentum in consumer spending.
It also notes that global tin stocks have increased in past months, particularly from June 2022 onwards, which will limit the potential for price increases.
For LME stocks in particular, depleted levels pushed marginal prices higher, especially when they were at close to zero at the beginning of 2022. The recovery in inventories over past months will place a lid on prices, eliminating chances of the strong rallies that were seen last year, Fitch forecasts.
Fitch points out that liquidity on the LME remains low, which does mean that higher levels of volatility are likely to remain a feature of trading in the short term at least.
The analyst anticipates that prices will remain pressured over H123 as the global economy continues to slow, but in the long term, predicts prices will edge higher as demand remains robust and the market surplus narrows from 2024 onwards.
Read the full report here.