In 2016, the world’s major economies experienced a slow recovery amid a series of unexpected events. Demand in downstream industries such as soldering and tinplate gradually rebounded, while the renminbi underwent a significant depreciation. Coupled with supply-side improvements brought about by joint production cuts by Chinese enterprises and enhanced environmental inspections, both domestic and international tin prices bottomed out and began to rebound. On the domestic market, after the sluggish performance of tin prices in 2015, nine major domestic tin producers announced in mid-January 2016 that they would collectively cut production by approximately 17,000 tons in 2016. This production-cut announcement immediately boosted tin prices. Moreover, as downstream industries resumed operations one after another following the Chinese Spring Festival holiday, market demand began to pick up rapidly. All these favorable factors helped keep tin prices at relatively high levels. In the second quarter, despite most smelters maintaining high production levels due to the price rebound, oversupply put downward pressure on tin prices. However, thanks to the shutdown of Yunnan Tin Group—the country’s largest tin smelter—for maintenance and inspection, tin prices generally stabilized.

Since entering July, the national tin industry has undergone environmental inspections. As a result, most smelters in Yunnan, Guangxi, and other regions have either reduced production or even temporarily shut down, leading to a temporary shortage in domestic tin supply and a noticeable rise in tin prices. In the fourth quarter, although domestic tin production gradually rebounded, tin prices remained supported by continued warming demand and amid the backdrop of a significant depreciation of the RMB. Throughout the year, the average price of the SHFE’s main contract stood at 118,618 yuan per ton, up 13.59% year-on-year. At year-end, the closing price reached 146,820 yuan per ton, compared to 93,370 yuan per ton at the end of the previous year—a year-on-year increase of 36.41%. The price peaked at 157,310 yuan per ton and hit a low of 90,110 yuan per ton. Meanwhile, the average spot price of tin in China was 118,874 yuan per ton, up 9.69% year-on-year. At year-end, the spot price was quoted at 148,000 yuan per ton, compared to 94,250 yuan per ton at the end of the previous year—an annual increase of 57.03%. The highest spot price reached 150,000 yuan per ton, while the lowest was 94,250 yuan per ton.

Industrial Policy and Major Events

1. The state has released the latest “Standard Conditions for the Tin Industry.”

In January 2016, China’s Ministry of Industry and Information Technology issued the “Normative Conditions for the Tin Industry,” aimed at standardizing the production and operational order of existing tin enterprises, enhancing the level of comprehensive resource utilization and energy conservation and environmental protection, promoting structural adjustment and industrial upgrading in the tin industry, and fostering the sustained, healthy, and sound development of the tin industry. Among other provisions, the new “Normative Conditions for the Tin Industry” stipulate that the scale of mine construction must not be less than 60,000 tons of ore per year.

2. China conducts environmental inspections on the tin industry.

Since July 19, 2016, China has conducted environmental inspections in eight major provinces, leading to the suspension or reduction of production at smelters. As a result, China’s refined tin production declined significantly in July and August. In particular, several large smelters in Yunnan Province reduced their output, and as of October, they had yet to fully recover from the impact of the environmental inspections.

3. The state has canceled the 10% export tariff on refined tin.

In December 2016, the Tariff Commission of the State Council issued the “Notice on the 2017 Tariff Adjustment Plan” (Tariff Commission [2016] No. 31), abolishing the export tariffs on waste and scrap tin (80020000), non-alloy tin (80011000), and other antimony ore sand and its concentrates (26171090). Prior to this, the state had imposed an export tariff of 10% on refined tin. Market participants generally believe that the removal of the export tariff on refined tin has eliminated an export barrier, allowing domestic tin ingots to enter the international market and fully participate in global competition. This development is of great significance for global tin trade, and it will also strengthen the linkage between domestic and international tin prices.