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The Adventures of Tin, Tin, Tin

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The Adventures of Tin, Tin, Tin

The industrial metals have been mired in a downward cycle over the past year. For much—if not all—of 2015, the market for industrial metals has been rather unfavorable and analyst expectations haven’t provided much hope for their improvement, either. However, the one outlier in July has been tin.

tin_can

Currently, tin is used for a variety of purposes. These uses are mostly limited to home construction, outdoor home decor, and electronics. In particular, tin is used in sheet metal, roofing materials, gutters, lighting devices, and as fire protection on wooden doors. The metal’s high resistance to corrosion from moisture and oxygen means that it is typically used as a coating for other metals or as an alloy with other metals.

Tin Outperforms

However, amid a near-stagnant metals market, tin has gained 15% this month. This rise in the tin market is surprising not only because of its recent idleness, but also because of the meager movement in the other base metals.

Tin has been the only industrial metal to advance in the past month and it’s chiefly due to export regulations from one of the globe's largest producers of the metal. While China may hold the largest influence on commodities in general, this has not necessarily been the case for the month of July.

Indonesian Supply

The export regulations in Indonesia have made it more difficult to obtain speedy deliveries of tin, not to mention that they’ve made it more costly to do so. The new restrictions have made rush deliveries more expensive than the standard three-month wait and have caused a delay in already-scheduled shipments. The resulting backwardation (when futures trade lower than current contracts) could be a sign of a short supply of tin.

Flag-map-of-indonesia

China’s influence on the metals market shouldn’t be entirely forgotten, though. Indicators of China’s development point to little or no increase in the tin market. The Chinese economy doesn’t only impact the tin market: Investors link the growth of China to many other base metals, as well as the platinum and palladium market. Any positive signs from China could influence other market predictions.

Assessing the Platinum Group Metals

One such case regards the outlook for the Platinum Group metals. In comparison to the performance of tin in this past month, platinum and palladium have barely eked out incremental gains as gasps of breath between steep downtrends.  Currently, platinum has been listless at $989 per ounce and palladium has made a barely-noticeable change at $623 per ounce.

palladiumPlatinum Group metals are used in catalytic converters, a device in vehicles which converts pollutants into less toxic emissions. These metals are also known and valued for their resistance to corrosion, much like tin. However, because of their industrial applications, their prices are largely on track with that of the auto industry; even as precious metals, platinum and certainly palladium see only modest retail demand as jewelry or bullion.

A forecast on catalytic converters up to 2019 anticipates global growth in auto sales. At an expected 6.4% increase in automotive production, Europe has the lowest prospects for potential growth for Platinum Group metals. The two top-performing regions are expected to be Asia and North America, at an expansion of 8.6% and 7.5%, respectively. Most of the growth in the automotive industry from North America is expected to be in Canada and Mexico.

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