Pressure building in the tin market? DATE: 25 May 2017 PREPARED BY: Cui Lin PREPARED FOR: SHFE Conference
Presentation overview 2016 in review Recent market trends The outlook for supply and demand Summary
Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Index Tin price versus other LME metals 600 500 400 LME and Tin price index LME Tin 125 120 115 LME base metals price index in 2017 Copper Aluminum Zinc Lead Tin Nickel 300 200 110 105 100 100 0 Index 2000 = 100 95 90 85 25-Apr-17 18-Apr-17 11-Apr-17 4-Apr-17 28-Mar-17 21-Mar-17 14-Mar-17 7-Mar-17 28-Feb-17 21-Feb-17 14-Feb-17 7-Feb-17 31-Jan-17 24-Jan-17 17-Jan-17 10-Jan-17 3-Jan-17
Jan 15 Mar 15 May 15 Jul 15 Sep 15 Nov 15 Jan 16 Mar 16 May 16 Jul 16 Sep 16 Nov 16 Jan 17 Mar 17 58 56 Manufacturing PMI Index USA EU China Japan 54 52 50 48 46 Index numbers above 50 indicate growth Positive growth in 2016, now slowing
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 450 400 350 300 250 200 150 100 50 World refined tin consumption 2000 2016e 000 tonnes China Japan Other Asia USA Other Americas Europe 0 Other
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 180,000 Tonnes refined tin use 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 Others Lead-Acid Glass Copper Alloys Chemicals Tinplate Solders Solder use in minor applications (photovoltaic cell, LED) has increased, offsetting the impacts of miniaturization Tin chemical use had a big growth with strong demand in US, South Asia and China 0 China Headline consumption increasing slowly
Changes in 2016 tin mine production tonnes Total World Myanmar Africa Brazil Other Australia Peru Indonesia Bolivia China -6,000-4,000-2,000 0 2,000 4,000
Sources of China tin raw materials, 000t 180 Crude tin imports for rerefining 160 Secondary 140 refined tin 120 production Concentrates 100 imports 80 60 40 20 0 Unreported mine production Reported mine production* * Official mine production data has ceased to be published since 2013. China imported around 61,000t tin concentrate and ore in 2016 Mine production and secondary refined tin in China reduced in 2016 Refined tin production in China was also impacted by environmental control Data: ITRI, CRU,CNIA Supply Headline increase was wholly from imported concentrate
120,000 China mine production by province Tonnes of tin-in-concentrate 100,000 80,000 60,000 40,000 20,000 Inner Mongolia Jiangxi Guangxi Hunan Other Yunnan 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 Headline Mine production decreased significantly
14,000 12,000 10,000 8,000 6,000 4,000 2,000 0-2,000-4,000-6,000-8,000-10,000 China market balance tonnes China Headline refined tin stock relatively high
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 80 60 40 China vs rest of world apparent market balance Refined tin, 000 tonnes ROW China balance Production minus consumption 20 0-20 -40-60 -80
Recent market trends 2016 in review Recent market trends The outlook for supply and demand Summary
Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 120,000 12-month rolling Indonesian refined tin exports Refined tin, tonnes 110,000 100,000 90,000 80,000 70,000 60,000 Indonesian tin exports strong in Q1 2017 relative to Q1 2016 50,000 Data: Indonesian surveyor data (tonnage checked prior to export)
Refined tin, '000 tonnes US$/tonne 8,000 20,800 7,000 2017ICDX trading volume LME3M Price 20,600 6,000 20,400 20,200 5,000 20,000 4,000 19,800 3,000 19,600 2,000 19,400 19,200 1,000 19,000 0 Jan Feb Mar Apr Up to May 18th 18,800 Indonesian export price relationship
2009 2010 2011 2012 2013 2014 2015 2016 2017f Myanmar Tin Production Areas Tin mine locations in Myanmar 60,000 50,000 40,000 Other areas Wa county Tonnes (tin content) 30,000 20,000 10,000 0 Source: ITRI, UNODCCP
Processing facility and technology is improving, little ore is exported Concentrate grades are 20%+ Ore stock in mining sites is decreasing Local mining is more complicated and difficult, needs more investment Ore and concentrate production is estimated to decline in 2017 Resource prospect is still unknown Headline Wa county tin production
80,000 China concentrate and ore imports Tonnes (Gross weight) 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Myanmar Others Concentrate and ore from Myanmar Headline are declining
Jan 10 Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15 Jan 16 Jul 16 Jan 17 4,000 China refined tin imports and exports tonnes 3,000 2,000 1,000 * Export tonnage is deduced from other countries imports; Export data incomplete in recent months China cancelled export duty for refined tin from 2017 0-1,000-2,000 Net Import Net Export Permission for concentrate processing trade is coming -3,000 China Headline will become a net exporter again?
000 lots 3,500 3,000 2,500 2,000 1,500 1,000 500 Trading volume LME SHFE 18,000 15,000 12,000 9,000 6,000 3,000 Daily open interest LME SHFE 0 2015 2016 Q12017 0 2015 2016 Q12017 Data: SHFE, Reuters SHFE tin trading is more active Headline 19
70 60 50 40 000t, refined tin Consumer SHFE LME Producer* 30 20 10 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 19 May 2017 Reported refined tin stock
The outlook for supply and demand 2016 in review Recent market trends The outlook for supply and demand Summary
Technology risks over time Potential net changes in annual tin consumption by sector, tonnes Energy materials Short-term (1-5 years) Medium-term (6-10 years) Tin chemicals Tinplate Solders -30,000-20,000-10,000 0 10,000 20,000 30,000
450 400 350 300 IU -1%pa IU -2%pa (Central Forecast) IU -3%pa Historical data Refined tin use scenarios to 2030 Annual consumption, 000 tonnes 250 200 150 IU = Intensity of use (Technological component of changing demand) 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030
Changes in mine production to 2021 Potential changes in tin-in-concentrate production (2016 vs 2021), 000 tpy Bolivia Africa Russia Brazil Project development not a certainty Other Australia Peru China Indonesia Myanmar Existing mines Projects -20-10 0 10 20
Global supply and demand balances in refined tin 000t 2013 2014 2015 2016 2017 World refind tin production 341.9 370.2 335.8 341.4 344.0 World refind tin consumption 349.0 357.8 345.7 352.7 355.1 Global market balance -7.1 12.4-9.9-11.3-11.1 Reported stocks 34.3 39.1 32.2 28.7 23.0 World stock ratio 5.1 5.7 4.8 4.2 3.4 Base price (US $/t) LME cash price - annual average 22,304 21,893 16,076 17,752 - Data: ITRI, CRU Supply deficit maintained
Summary 2016 in review Recent market trends The outlook for supply and demand Summary
An imminent price explosion? Pressure building in the tin market: Sustained global supply deficit Visible stocks near historic lows Underlying decline in mine supply rising costs few alternative sources But potential pressure relief : Macro-risks to tin demand Price responsive Indonesian tin output Headline Hard-to-predict Myanmar output Chinese exports?
2017 Asia Tin Week Highlights: CEO discussion 12-15, September, 2017 Kunming, China Expected 300+ delegates Half overseas delegates and half Chinese delegates Main tin production country reports - China, Indonesia, South America Application & technology outlook: Solder, Tin chemical, Advanced smelting technology YTC smelter visit
Thank You We believe that global co-operation on markets, technology, sustainability and regulatory issues is the most cost effective route to achieve long-term success for the industry. If we work together effectively then the outlook for tin is very positive. Global co-operation for long-term success ITRI Unit 3, Curo Park Frogmore St. Albans Hertfordshire AL2 2DD United Kingdom + 44 (0)1727 875544 www.itri.co.uk ITRI China Room 1606, C2 Tower, Jinmao Building, No. 18 Xizhimenwai Street, Xicheng District, Beijing, China, 100044 +86 10 6808 0915 chinaoffice@itri.co.u k www.itri.com.cn