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News flash: recentlyCrashsimulatorThe price of tin on the London Metal Exchange (LME) has soared nearly 20% so far this month, and the increase has further widened to 25% during the year, far exceeding it.CrashsimulatorHe became a dark horse in the market for commodities. The rise in tin prices is behind severe disruptions in tin supplies in major producing countries such as Indonesia, Myanmar and the Democratic Republic of the Congo, while increased demand for computing power by the growth of the global artificial intelligence industry has contributed to the expansion of demand for electronic products. Tin benefits as a result. LME tin inventories have fallen 47 per cent, and spot tin contracts are at a premium, indicating tight supply in the market. Despite discussions about bullish traders' positions driving the market, the rally in tin prices may not be over, trading at about $32940 a tonne in Asia on Wednesday.

Text of news flash

[tin price soars by 25%, becoming the new "dark horse" in the market]

Recently, the commodity market is magnificent, from cocoa to crude oil, from gold, silver and copper to aluminum and nickel, price fluctuations have attracted market attention. However, tin, a kind of metal, has not been highly concerned by the industry, but its price has risen sharply and become the new "dark horse" in the market. Tin futures on the London Metal Exchange (LME) have soared nearly 20 per cent so far this month, according to market data, and have widened further to 25 per cent this year, far outpacing commodities such as copper, gold and crude oil, which are more widely watched by investors.

There are a series of special fundamental reasons behind the rapid rise in tin prices. Tin supplies in the major producers Indonesia, Myanmar and the Democratic Republic of the Congo have been severely disrupted recently, while on the demand side, demand for electronics will expand as demand for computing power increases in the global artificial intelligence boom. Tin will also benefit.

In the electronics industry, tin alloys are mainly used in the manufacture of welding materials and electronic components. However, investors need to be particularly reminded that the discussion in the tin market in recent weeks has focused more on the role of a single bullish trader's position in driving the market. The trader has recently tightened its grip on the LME tin market and now holds at least 40 per cent of its LME tin long position for delivery in May.

According to statistics, the concentration of such positions has not been seen since 2017, equivalent to at least 90 per cent of current LME inventory holdings. As contracts expire in May, many holders of short positions may find themselves in trouble: there is not so much spot tin available for delivery and can only be closed.

"some market participants think there may be a risk of short selling," said one industry source. They are keeping a close eye on the big bulls in the May contract. " Cyclical short runs are easy to occur in commodity markets, especially in illiquid markets such as tin. In this case, as bears are forced to stop losses, prices soar in a short period of time.

LME has also acknowledged the tight supply in the tin market and told the media that it is closely monitoring the market. LME said it had taken the necessary controls to ensure a sustained and orderly market, citing its restrictions on recent monthly spreads, late delivery procedures and mechanisms to control volatility.

Even leaving aside the mysterious bulls, the current rally in tin prices may be far from over. Indonesia is the world's largest tin exporter, and Indonesia's tin exports have fallen because of delays in licensing and high-profile corruption investigations that have affected many tin smelter executives and traders. In addition, tin production in civil war-ravaged Myanmar, the world's third-largest tin producer, has slowed, while tin production in the Democratic Republic of the Congo has also been disrupted by armed unrest.

On the demand side, the growth of the global artificial intelligence industry has brought potential benefits to metals widely used in electronics and electrification, including tin. Because of its good conductivity, moderate melting point and stable chemical properties, tin is widely used in the connection and welding of electronic components, such as the manufacture of circuit boards and the packaging of electronic components. In addition, metal tin is also used in the manufacture of electronic devices such as tubes and transistors, as well as insulating layers of cables and wires.

Jeremy Pearce, director of market intelligence and communications at the International Tin Association, said, "each data byte and each electron passes through hundreds of solder joints, which connect all the data together. Although it is challenging to accurately estimate demand at this stage, the basic idea is that computing and communication systems will require more tin."

LME tin stocks have fallen 47 per cent so far this year to 4045 tonnes. The metal's term structure is already showing a spot premium-a futures contract with a spot price higher than three months, indicating a tight supply in the market. Recently, there have been clear signs that speculative bets on tin in LME have been increasing, with hedge funds, asset managers and other financial institutions entering the market. The total number of net long positions held by these institutional investors has risen to the highest level since LME began publishing such data in 2018. The combined long positions held by these traders, which are rarely involved in physical tin trading, now account for 69 per cent of all bullish bets.

LME tin contracts climbed to their highest level since June 2022 on Friday, while the number of open contracts was the highest since 2015. As of Wednesday in Asia, tin prices for LME futures had not changed much this week, with the latest price at about $32940 a tonne.

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