Zheshang Securities released a research report that the price of tin in Shanghai has been continuously falling since mid-July and fell below 2.4 million yuan/ton. The price of tin stabilized and rebounded. Recently, the decline in tin prices stimulated downstream companies to purchase actively. Terminal companies also chose to actively replenish stocks at low tin prices, and the spot trading market remained relatively active. Affected by tight supply and demand recovery, the global refined tin gap is expected to be about 0.0104 million tons in 2024. Relevant companies will benefit from rising tin prices, and Yunnan Tin Co., Ltd.(000960.SZ), Guangxi Huaxi Nonferrous Metal(600301.SH), and Inner Mongolia Xingye Silver&Tin Mining(000426.SZ) are recommended and monitored.

The main points of China Merchants Securities are as follows:

Tin prices hit bottom and rebounded, and inventories decreased significantly. The tin price in Shanghai fell continuously since mid-July and fell below 2.4 million yuan/ton, and the price of tin stabilized and rebounded. As of August 9, the main contract price of tin in Shanghai was 257,000 yuan/ton, a weekly increase of 3.34% and a year-to-date increase of 21.17%. Recently, the decline in tin prices stimulated downstream companies to purchase actively. Terminal companies also chose to actively replenish stocks at low tin prices, and the spot trading market remained relatively active. As of August 9, the total social inventory of tin in three places (Suzhou, Shanghai, Guangdong) was 11,700 tons, a decrease of 9.68% from the previous month, and a decrease of 39.72% from the peak this year, and the inventory is now comparable to the same period last year. It is expected that the inventory of tin ingots will decrease to within 0.01 million tons at the end of the third quarter.

Disturbances in the export of Wa State, Indonesia, have caused the supply to be generally tight. In terms of tin ore, in June, the Central Economic Committee of Wa State agreed to resume transportation in the Mansiang mining area, but production is still stagnant, and the time for resumption of production is uncertain. The import volume of tin ores from other countries has remained basically stable, and there is expected to be a small increase. In June, China's tin ore import volume was 0.0128 million tons, up 55.23% from the previous month, and down 40.79% year-on-year. In terms of tin ingots, Indonesian tin ingot exports have gradually recovered but are still at a low level. According to data from the Indonesian Ministry of Commerce, Indonesia's refined tin exports in June were 4,459 tons, up 35% month-on-month and down 44.20% year-on-year.

Affected by the shortage of tin ore, the output of refined tin in July decreased month-on-month. In July, China's domestic refined tin output reached 0.0159 million tons, a decrease of 2.2% month-on-month and an increase of 39.8% year-on-year. The main reason is that a certain refining and smelting enterprise in Yunnan is still shut down due to handover issues, and some smelting enterprises reduce production due to shortages of raw materials. From January to July 2024, China's domestic refined tin output reached 0.1079 million tons, an increase of 12.28% year-on-year. It is expected that the output of refined tin will continue to decrease in August.

The recovery of downstream consumption drives the growth of tin demand. Semiconductors and consumer electronics are the main demand for tin. In terms of semiconductors, according to the World Semiconductor Trade Statistics (WSTS), global semiconductor sales have achieved year-on-year growth for nine consecutive months. In May 2024, the global semiconductor sales were $50.561 billion, a year-on-year increase of 22.09% and a month-on-month increase of 12.55%. According to WSTS's forecast, the total global semiconductor sales in 2024 will increase to $611.2 billion, a year-on-year increase of 16%. In terms of consumer electronics, Apple plans to increase the shipment volume of iPhone 16, which will further stimulate the demand for consumer electronics. With the recovery of demand in the large electronics industry, we expect that it will continue to drive the demand for tin solder.

Risk warning: the resumption of production in Wa State is uncertain, and downstream consumption is lower than expected.