Record tin prices are expected to cut demand

By Tom Stundza -- Purchasing, 4/30/2008 11:58:00 AM

Tin is selling at record highs of around $11.16/lb and some analysts believe such price elevation will curb demand by the packaging and electronic industries and discourage the use of the silvery metal in new areas. Tin, which is widely used in food packaging and to solder electronic products, costs 45% more now than at the start of the year.

Peter Kettle at tin consultancy ITRI in London tells the Reuters News Service that markets are worried about supplies from top producers China and Indonesia. Solders, which join components in the assembly of electronic products, account for about half of global consumption, estimated around 330,000 net tons last year. Aluminum and plastics could be used instead of tin in packaging. The only area when tin can’t be substituted is in the plating of steel sheet, which is about 20% of use.

Following the major weather-related disruptions suffered in January and February, there was a partial revival in Chinese refined tin production in March, according to ITRI newsletter. Statistics from the China Nonferrous Metals Association (CNIA) show that production rose to 10,353 net tons in March, having fallen to around 9,000 tons in both January and February. Still, first quarter production was off 13% on year-ago levels. There were particularly large declines in the provinces most affected by severe winter weather, with quarterly output in Hunan reported down by 28% and in Guangxi by 34%. However production in the most important tin province, Yunnan, was only down 8%.