Our brief guide on how to invest in tin covers topics such as supply and demand dynamics, top producers and investment strategies.
After a rough few years of volatility, tin managed to rise 18 percent in 2020.
That upward pressure in the tin market continued at the start of 2021, according to Reuters, with prices up 10 percent in the first month of the year. In fact, in late January 2021, the tin price reached highs not seen since 2014, and analysts remain optimistic about the long-term outlook for the tin market.
Tin is primarily used to coat other metals due to its ability to retain a high polish and prevent corrosion. Tin is also an alloy metal used in soldering and the production of rare earths superconducting magnets.
Because of its price rise and key uses, interest in tin investing is increasing. To help investors looking to jump into this commodity sector, the Investing News Network has put together a brief guide to tin supply and demand dynamics, as well as an overview of how to start investing in this silvery-white metal.
Tin investing: Supply and demand
The tin market has been in deficit for the past decade, and is expected to stay in deficit as demand rises.
Due to its many positive characteristics, there are a lot of uses for tin. For example, the metal is malleable, ductile and not easily oxidized in air; it’s also lightweight, durable and fairly resistant to corrosion. Those qualities make tin, which is obtained from the mineral cassiterite, a good candidate for use in solder, as well as tinplate, chemicals, brass and bronze and other niche areas.
In terms of where tin is produced, China was the world’s top tin producer in 2019; it put out 85,000 metric tons (MT) of the metal, down 5,000 MT from the previous year. Indonesia is close on China’s heels at 80,000 MT. Third on the list is Burma at 54,000 MT. Total world output for the year was 310,000 MT, down 8,000 MT from the previous year, and world tin reserves sit at 4.7 million MT.
Currently, the Dodd-Frank Act in the US requires public companies that source minerals from the DRC to produce an independently audited report about the ownership and source of these mined commodities for the US Securities and Exchange Commission.
Tin investing: How to start
As mentioned, investing in tin is becoming more and more appealing as demand for the metal grows. Tin is also interesting for investors because of its ability to serve as a hedge against the US dollar and against inflationary pressures in certain environments.
Those wanting to begin tin investing may want to consider exchange-traded funds (ETFs) and futures. According to CommodityHQ, many ETFs include exposure to tin, generally along with copper, nickel, lead and aluminum. Tin futures are traded on the London Metal Exchange under the code SN, with contract pricing in US dollars per tonne. Clearable currencies include the US dollar, yen, pound and euro.
Of course, tin investing can also be done by buying shares of tin-focused companies. Tin-producing companies may be a good place to start, though if you are an investor with more risk tolerance you may also want to look at tin exploration companies.
This is an updated version of an article first published by the Investing News Network in 2019.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.