As resource quality declines and mining costs gradually rise in traditional major production areas, mine supply will continue to decline; as demand for demand-side semiconductors increases, the overall center of tin prices will gradually move upward in 2024-2025, and we are optimistic about the stock price performance of listed companies in the tin industry.
The Zhitong Finance App learned that Everbright Securities released a research report indicating that recently, M23 has disrupted key tin supply routes in the NorthKivu region, and the tight pattern of tin ore supply may increase. Tin resources are scarce. The global static storage ratio is 15 years. As the grade of resources in traditional major production areas declines and mining costs gradually rise, mine supply will continue to decline; demand for demand-side semiconductors will increase, and the overall center of tin prices will gradually move upward in 2024-2025, which is optimistic about the stock price performance of listed companies in the tin industry. We recommend Tin Industry Co., Ltd. (000960.SZ), and it is recommended to focus on Xingye Silver Tin (000426.SZ) and Huaxi Nonferrous (600301.SH).
The main views of Everbright Securities are as follows:
Since mid-2022, the M23 non-state armed group has controlled the area between Lake Edward and Lake Kivu, which is a major trading route for minerals, including tin. According to ITA, M23 blocked two main roads leading to Goma from the north and west, preventing the delivery of goods to the provincial capital city with a population of 2 million people. Furthermore, according to ITA reports, the eastern border crossing of the Democratic Republic of the Congo (DRC) has shortened operating hours due to the conflict, which poses the risk of further delays in the transportation of concentrate from East Africa to smelters in Asia.
The Bisie mine accounted for 4.5% of global tin production in 2023, and concentrate exports from the Democratic Republic of the Congo (DRC) have not declined sharply since the conflict escalated. Alphamin's Bisie mine is located about 180 km west of Goma. The mine's production in 2023 accounts for 4.5% of global tin production in 2023. Since the conflict escalated in early 2024, there has been no significant decline in concentrate exports from the Democratic Republic of the Congo (DRC).
Future transportation routes for tin ore products at the Bisie mine may be delayed, and production is not expected to be affected. ITA is currently unaware of any disruptions in tin supply, but ongoing conflict poses a threat to key supply regions and routes for the tin concentrate trade. As mineral transportation routes are further adjusted north and south away from areas controlled by non-state armed groups, shipping delays may occur, but production at the Bisie mine is not expected to be affected.
Tin prices are expected to benefit from the 24-year recovery of the semiconductor industry. Semiconductors and photovoltaics accounted for 40% and 5% of the downstream demand for tin in '22, respectively. In the past few years, tin prices had a strong correlation with global semiconductor sales; according to the WSTS forecast in November 23, global semiconductor sales revenue was -9% and +13%, which helped drive the upward trend in tin prices; traditional demand such as tin chemicals, tinplate, and lead-acid batteries is expected to remain stable in '24.
Everbright Securities predicts that global demand for fine tin will grow at a year-on-year rate of -2.0%, +4.9%, and +3.7% in 23-25 years. The timing for the resumption of production in Myanmar is yet to be determined, and the supply of tin ore continues to be tight. The global static storage ratio of tin is 15 years, which is the lowest among the world's major metals (containing antimony). Myanmar's Wa state began to stop tin mining in August 2023. In 2022, Wa state accounts for 10% of the world's tin production. On April 7, 2024, the Wa state issued a notice that mining areas other than the Manxiang mining area can apply to resume work and resume production. The Manxiang mining area is the main tin ore producing area in Wa. The time for resuming production is still uncertain, exacerbating the pattern of tight global tin ore supply.
Risk warning: There is a risk that tin supply exceeds expectations, demand for tin falls short of expectations, and the threat of M23 non-state armed groups to the transportation of tin ore products.