London 14/01/2016 - Price-induced supply cuts in China and elsewhere will see the tin market slip to a 10,000-tonne deficit in 2016, Peter Kettle, manager of market analysis at industry association ITRI, told FastMarkets.
"Particularly in China, the production cuts have accelerated in the past couple of months - people are now saying that they are going to shut the factories until after the [Lunar] New Year holiday [from February 13]," Kettle said
A marked increase in Chinese refined tin production, fuelled by the development of significant tin deposits in Myanmar over the past five years, has dramatically shifted the market, with China now more likely to export rather than import the metal.
But prices have slumped dramatically of late, sliding to $13,085 per tonne today on the LME, their lowest since June 2009.
SHFE prices hit a two-week high today at 93,800 yuan per tonne but are still significantly lower than their mid-December high of 98,660 yuan.
And lower prices in China have led to production curtailments of late - the world's biggest tin producer, Yunnan Tin, suspended some mined output.
"Yunnan cut back some of their higher-cost mining operations over recent months but the bigger cuts have come from some of the private smelters and particularly some of the secondary producers," Kettle said.
As well, tin exports from Indonesia, the world's biggest tin exporting country, should fall after the introduction of more stringent regulation of the mining and smelting industry there.
Indonesian exports of tin were at a 12-year lows of 70,154 tonnes in 2015, preliminary data from the Indonesian Ministry of Trade indicates.
"We could be at the lowest level since 2003 because you had a big run from 2005 where the volumes were often above 100,000 tonnes so we have come down quite sharply in the last three years since [Indonesian] export regulation started to be tightened from September 2013," Kettle said.
But ITRI forecasts exports from Indonesia to fall further this year, with volumes running at 5,000-5,500 tonnes per month, equivalent to 60,000-66,000 tonnes per year.
"Volumes should tick over at around 5,000 tonnes per month so overall that's not oversupplying the whole tin market," Kettle said.
(Editing by Mark Shaw)