Struggling to get a lift

By Staff -- Purchasing, 2/8/2001

What's happening: The U.S. used at least 4% less tin last year than in 1999, the second year in a row that purchasing and end use has fallen. And that's why the domestic market prices for alloyers' grade and coating grade tin were flat in 1999. A second-half collapse in demand was evident from buyers who use the nonferrous metal as a coating for steel cans, in solders for joining pipes or electrical conductors, and in bearing and other alloys for widely diversified applications. In fact, the 50,000 metric tons consumed was the lowest level since 1996. This year will be a no-growth year, at best, although most analyses suggest continued cutbacks in demand. Worldwide, use rose 2.2% last year from 1999. Tin is a thinly used metal compared to the other major nonferrous production-grade commodities. World production has risen from 200,000 metric tons in the middle of the 1990s to 250,000-plus metric tons. In the same timeframe, demand has risen from 240,000 to 250,000 metric tons, so formerly bloated global stockpiles have been eliminated. Demand is expected to fall this year. And that's why CRU International in London says "with Chinese exports remaining at an extremely high level and demand still unconvincing, pricing fundamentals in the tin market continue to be poor." (China is the world's largest tin supplier, followed by Indonesia, Peru and Brazil.) The London Metal Exchange price has averaged $2.56/lb for the past two years. The only change expected this year is slippage to $2.45. Domestic prices are based on these LME averages. That's because while the U.S. is the world's largest user of primary tin, 80% of domestic demand is imported-with the remainder coming from locally recycled material. No tin has been produced in the U.S. since 1998.

Why it's happening: After its main use, the coating of sheet steel to create tinplate, tin is used in soldering, electronics, chemicals, plastics, foams, ceramics coloring, engineering alloys, pewter, bronze, dental amalgams and electroplating. The London-based International Tin Research Institute has reported advances in marketing tin foil capsules to replace lead foil capsules on wine bottles and as a non-cyanide-based electrolyte that yields a coating of tin and zinc to replace cadmium as an anticorrosion coating for steel. However, market analyses stress that neither these uses-nor such things as lead weights used to balance car wheels or tin bullets to replace lead shot-offer much growth in annual demand for the metal. But even tinplated steel is having a tough time these days. Steel can shipments dropped at least 4% last year from the estimated 33.4 billion shipped in 1999. Domestic tinplate supply has been averaging 4.2 million net tons during the past decade, while the actual consumption market has been averaging 3.7 million net tons annually. Use dipped by 2% last year to 3.6 million net tons, while supply stayed around 4.2 million. Since world capacity is substantial, supply always is larger than demand, and that recently triggered a major steel industry consolidation. U.S. Steel Group in Pittsburgh boosted its annual capacity to make tin-coated sheet to 1.9 million net tons by acquiring LTV Steel's tin mill products operations in Pennsylvania and Indiana.

What to expect: The industrialization of economies in less-developed nations is prompting a demographic shift away from rural areas toward urban populations-and boosting demand for canned foods and beverages, which gradually may boost tinplate (and tin) demand in non-traditional end-use regions. However, no surge in demand is anticipated. Also, in recent years, environmental legislation has seen the percentage of tin in solders rise, replacing lead. However, the overall amount of solder used is experiencing restrictive growth, with individual applications using less solder as a result of the miniaturization of electronic goods and solder-free joints/connections. Atop that, the expansion in global mined and refined capacity is expected to continue-keeping downward pressure on tin's market pricing.

What's up with TIN