Vai dal Barbieri:
If you never leave your Pond... you don't discover new things

These last few weeks have been very important, not only for the global market but also for me. In fact, today I would like to open with a consideration: just as I finish this article, I am about to embark on a direct flight to Indonesia. I admit that, for a series of reasons, this is the first time I will be traveling outside of Europe, which is quite unique given my preference for visiting places through Google Earth rather than in person. In addition to the typical research done to structure the itinerary, I wanted to delve into the economic condition of the country I am about to visit. Consulting our news and macro data databases, I came across an article regarding the impact of tin extraction dating back to 2021 from The Guardian. But not only that, delving further into the research, I discover that Indonesia is the second largest tin extractor in the world and continuing the search, I realize that I am facing a market that is anything but transparent and with little media coverage (which is strange for a commodity). All these elements have led me to the decision to delve deeper into the topic and to write very interesting information and data.

When we talk about tin, we are talking about one of the first metals to be discovered by humans, with its use dating back to around 3500 BC in the city of UR in Mesopotamia (modern-day Iraq). It was used mixed with copper to increase its hardness and obtain bronze for armor and jewelry. It was then massively used in the 19th century after the discovery of its properties in food preservation. To this day, in some uses, it has been replaced by aluminum (such as for food preservation) and is predominantly used for its binding properties, high conductivity, and low melting point. In fact, almost 50% of its current usage is employed for soldering, especially for consumer electronics equipment. So much so that after the legislative imposition in 2006 in America, which banned the use of lead in soldering, there was a significant increase in the demand for this metal, resulting in an increase in its price. Beyond the electronics sector, lead continues to be used in the chemical industry, in batteries, and in alloys.

But what do the numbers tell us? In 2023, the tin market was worth approximately $8-9 billion, a truly small market. Much depends on the presence of substitutes in some of its main applications, such as aluminum, which has almost completely replaced tin in packaging and partially in some industrial pastes for soldering, and the presence of an active secondary market in support. But these numbers could change; one must consider that electrification, digitalization, and the green transition will require significant quantities of this material, which is used in EVs, solar panels, and data centers, whose demand will increase significantly in the coming years and could scrutinize this tiny market in partial balance.
In fact, its listing does not reflect:

• its global importance and relative usage
• the difficulty in extraction
• in general, the morphology of the supply.

Global supply is highly concentrated, with almost 70% of production coming from 3 countries: China, Indonesia, and Myanmar. More fragmented production comes from various African states (primarily Congo, Rwanda, Nigeria), which contribute about 10% to the supply, and some South American states (approximately 15%): Brazil, Bolivia, and Peru. Its strong concentration is also due to its geological presence concentrated in the aforementioned areas. One must also consider the fact that the world's largest producers are facing significant production challenges:

• decline in the quality of the extracted ore. Most of the easily extractable tin has already been taken, leaving lower quality (more expensive and complex) and high-risk tin. Referring to Indonesia, extraction occurs through dredging in open sea as on land reserves are scarce.
• a market price that does not incentivize exploration or further investments. Tin has a market price of 26kt while the production cost is estimated at 30kt; there is no incentive to bring more supply to the market.

Market supply is also very rigid and subject to shocks. Even if conditions do not change in terms of import-export and country relations remain unchanged, which is unlikely given recent times, awareness of the material's criticality is changing. Many countries have included tin among critical materials, including China, Japan, the USA, Korea, India, and recently Indonesia (October 13, 2023) and Australia (December 16, 2023). The recognition of its criticality and intrinsic value strongly clashes with its current listing. This situation presents one of the most intriguing asymmetries within the commodities landscape. It is important to emphasize that challenges related to supply cannot be solved with mere political declarations but require sustained commitment over time through exploration and extraction activities.