Column: Myanmar’s Wa State Army keeps global tin market guessing

The Wa State, the largest of the country’s ethnic groups, ordered the suspension of all mining and processing operations in the autonomous region at the start of August for an extensive audit. (Stock Image)

The tin market’s fortunes remain beholden to Myanmar’s United Wa State Army, which controls one of the world’s largest mines.

The Wa State, the largest of the country’s ethnic groups, ordered the suspension of all mining and processing operations in the autonomous region at the start of August for an extensive audit.

That ban has been lifted with effect from Jan. 4 for most mining. The major exception is the Man Maw mine, which accounts for almost all tin production in a region that is the world’s third largest producer and the dominant supplier to China’s smelters.

The impact of the suspension has so far been muted. It was well flagged, allowing Chinese players to stock up on ore and metal, and the loss of supply coincided with a downturn in global demand.

The London Metal Exchange (LME) three-month tin price remains locked in a $23,000-25,000 per metric ton range, last trading at $24,220.

However, with demand from the all-important soldering sector showing signs of picking up, the market needs Man Maw back up and running sooner rather than later.

China's imports of tin more from Myanmar and other suppliers
China’s imports of tin more from Myanmar and other suppliers

Slow progress

The Wa State leadership has allowed Man Maw operators to process surface stocks of tin ore since September, according to the International Tin Association (ITA), which has been monitoring developments in this opaque part of the global supply chain.

The Wa State Mineral Industry Administration held a meeting with Man Maw operators on Dec. 4, resulting in the submission of a mine management proposal to the Wa State Central Committee (EPC) for further review.

New rules reaffirm that all mining rights belong to the EPC and require investors to apply for a three-year exploration permit before applying for a full mining licence.

The EPC’s decision on Man Maw is pending, according to the ITA. The Association noted “optimistic forecasts” that full mining will be allowed to resume after the Chinese New Year, but said it may take time to re-mobilize the workforce after six months of suspension.

In the interim, surface stocks “are now reported to be mostly exhausted,” the ITA said.

China's net trade in refined tin
China’s net trade in refined tin

China turns to metal imports

China’s imports of tin ore from Myanmar have appreciably slowed after the August suspension.

Flows of raw material over the border dropped in September before picking up again in October and November, likely reflecting the resumed processing of above-ground stocks.

Imports over the September-November period totalled 32,000 tons, compared with 65,000 tons in the prior three months, when operators were rushing to beat the Aug. 1 deadline.

Chinese smelters have turned to other suppliers such as Bolivia. Imports of ore and concentrate from the South American country nearly tripled to 8,550 tons in the first 11 months of 2023 from 2,900 in the year-earlier period.

Chinese production of refined tin has so far held up well. Output in December was up 4.5% on December 2022, while full year production of 168,938 tons was 1.8% higher than 2022, according to local data provider Shanghai Metal Market.

However, it is noticeable that Chinese stocks of refined metal have been falling and imports rising, suggesting domestic output is not matching demand.

Inventory registered with the Shanghai Futures Exchange has fallen from a May 2023 high of 9,673 tons to a current 6,402.

November’s import tally of 5,350 tons was the highest monthly count since May 2022 and cumulative imports of 28,500 tons were up 2.7% on the same period of 2022, when refined tin imports reached their highest level since 2012.

Demand recovery

The Western market has been well supplied in recent months and can afford to lose those units to China.

LME stocks of tin more than doubled to 7,700 tons and physical premiums slid over the course of last year.

Demand from the electronic goods sector, which accounts for around half of all tin demand in the form of circuit-board solder, has been particularly weak.

Sales of semiconductors, a useful proxy for tin solder demand, likely fell by 9.4% in 2023, according to the latest forecast from industry body World Semiconductor Trade Statistics.

However, it expects “a robust recovery” in 2024, anticipating year-on-year growth of 13.1% led by the Americas and Asia-Pacific regions.

How well the tin market can handle that sort of demand rebound will depend in large part on how long it takes the Wa State leadership to approve the full return of the Man Maw tin mine.

(The opinions expressed here are those of the author, Andy Home, a columnist for Reuters.)

(Editing by Barbara Lewis)


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