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Hey,

Tin isn't the flashy stock you see on every financial blog, and it won't dominate your social media feeds. 

But for investors who want to think outside the box, commodities like tin can open the door to a whole new world of opportunities. Tin is in everything from electronics to renewable energy technology, making it a quiet but critical player in global supply chains. If you're new to commodities or have never considered metals beyond gold or silver, tin could be the overlooked gem in your investment toolkit. 

Let’s break it down and see why this unassuming metal might deserve a place in your portfolio.

In today’s guide, I’ll cover:

• What exactly is tin?
• What’s it used for?
• The market: supply vs demand trends
• The market: tin prices over time
• How to invest in tin
• What’re the big risks

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What exactly is tin?

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In the simplest of terms, tin is a type of metal that is lightweight, soft, and silvery in color. It doesn’t rust easily, which makes it useful for coating other metals to protect them. It’s malleable (easy to bend or shape) and has a low melting point, so it’s often used in soldering to join metal parts together. Tin is also resistant to corrosion, non-toxic in small amounts, and has been used in alloys like bronze (a mix of tin and copper) to create stronger materials.

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What’s it used for

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Tin is one of those metals that quietly plays a huge role in our lives without most of us even noticing. Take bronze, for example. That’s an alloy made of copper and tin, and it’s been around since ancient times - think weapons, tools, and even art. Fast forward to today, and tin is still going strong, especially in soldering. You know all those electronic devices we rely on? Tin-lead solder is what helps connect the wires and components inside them, keeping everything working smoothly.

And let’s not forget tin’s starring role in food storage. Those "tin cans" in your pantry? They’re actually made of steel coated with tin. Why? Because tin doesn’t rust, which makes it perfect for keeping food safe. Tin plating isn’t just for cans, though - it’s also used to protect things like plumbing fixtures and car parts from corrosion, making them last longer.

Tin even helps make windows! There’s this process called the float glass method where molten glass is floated on molten tin, creating super-smooth, flat glass. That’s how we get those clear, perfect window panes. 

About 45% of the world’s tin is used in electronics for soldering connections - basically making sure all the bits inside your gadgets talk to each other. Tin has also been used in marine paints to stop barnacles from growing on ships, though that’s been scaled back because of environmental concerns. Oh, and let’s not overlook its softer side tin’s malleability makes it great for jewelry and fancy tableware, and its density is even used for radiation shielding in nuclear facilities.

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The market: supply vs demand trends

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If you’re a new investor thinking about tin, here’s what you need to know: the tin market has been in short supply for over a decade, and with demand continuing to rise, it doesn’t look like that’s changing anytime soon. This supply crunch, combined with surging electronics demand, has kept tin prices strong in recent years.

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In fact, in the second quarter of 2024, tin prices hit a two-year high, climbing above $35,000 per metric ton (MT). 

What drove this? 

A mix of rebounding demand from China and tin’s critical role in industries like infrastructure, soldering, and even AI chip production. These trends are fueling optimism about tin’s future.

For those keeping an eye on tin as an investment, one key indicator is the inventory levels tracked on the London Metal Exchange (LME). Early in 2024, as optimism around tin grew, speculative buying increased, causing tin stock levels on the LME to drop by 46% by mid-April - right around the time prices hit that two-year high.

On the supply side, it’s important to watch disruptions in major tin-producing countries. For example, delays in export licenses in Indonesia and mining issues at Myanmar’s Man Maw mine were significant factors behind tin’s price spike earlier this year. These two countries are among the top tin producers globally, with Indonesia producing 52,000 MT and Myanmar 54,000 MT in 2023. They trail only China, which leads the world with 68,000 MT. Peru and the Democratic Republic of Congo (DRC) round out the top five producers.

Big players in the tin market are based in these regions, too. Companies like China’s Yunnan Tin, Indonesia’s PT Timah, Peru’s private company Minsur, and Malaysia Smelting are some of the industry leaders.

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But supply isn’t just about production challenges - it’s also influenced by politics and conflict. 

Tin, like tungsten, tantalum, and gold, is considered a "conflict mineral." In the DRC, armed groups make hundreds of millions of dollars annually trading these minerals. To address this, U.S. companies that source tin from the region are required under the Dodd-Frank Act to provide audited reports on where and how their tin is sourced.

For investors, the combination of rising demand, limited supply, and geopolitical factors creates a complex but potentially rewarding picture for tin. Keep an eye on market developments and the global supply chain—it’s where the opportunities (and risks) lie.

The market: tin prices over time

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Tin prices as illustrated in the above chart have been on a bit of a rollercoaster over the past decade, driven by a mix of demand, supply issues, and global events. If you’re new to this, here’s a simple breakdown of what’s been happening:

• Demand from Electronics: As I mentioned earlier, tin is crucial in electronics, especially for soldering (the stuff that connects circuit boards). As gadgets like smartphones and renewable energy tech have exploded in popularity, demand for tin has stayed strong, creating a base level of support for its price.
• Big Drop (2014–2016): Tin prices took a dive during this period, hitting their lowest point in years (around $15,000 per metric ton). Why? There was just too much supply, and global manufacturing slowed down, meaning less demand for tin.
• The Bounce Back (2016–2019): Prices started climbing again as countries like Indonesia and Myanmar scaled back their production. This limited supply pushed prices to a healthier range, hovering between $18,000 and $22,000 per metric ton.
• COVID Chaos (2020): The pandemic threw everything off balance. Tin prices fell early in 2020 when factories slowed down, but by the end of the year, they shot up again. Why? Industries got back to work, and supply chains were still playing catch-up.
• Record Highs (2021–2022): Tin prices hit insane levels during this time, even topping $40,000 per metric ton! A global chip shortage and a surge in demand for electronics pushed prices through the roof. Throw in supply chain problems, and you’ve got a perfect storm.
• Still Pricey (2023): Things have calmed down a bit, but tin is still pricier than it used to be, averaging $25,000–$30,000 per metric ton. Part of this is due to concerns about shrinking tin reserves, rising mining costs, and ongoing geopolitical risks.

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How to invest in tin

For new investors looking to invest in tin, the three easiest ways would be:

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1. Tin ETFs (Exchange-Traded Funds)

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Example: iShares MSCI Global Metals & Mining ETF (PICK) - This ETF provides exposure to companies involved in the production of metals, including tin. It's easy to buy and sell on the stock market, making it ideal for beginners.

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2. Mining Stocks

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Example: Minsur S.A.
A leading tin mining company, Minsur is a relatively straightforward stock to invest in. It’s a direct way to gain exposure to the tin market through the performance of a mining company.

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‍3. Commodity Index Funds

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Example: Invesco DB Commodity Index Tracking Fund (DBC)
This fund tracks a broad range of commodities, including tin. It offers a simple way for new investors to gain diversified exposure to tin and other base metals.

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What’re the big risks

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Investing in tin comes with its share of challenges, so it’s important to stay informed about the potential risks. For starters, the tin market is relatively small, which can lead to price swings and liquidity issues, especially for larger investors. 

There’s also the geopolitical risk, with key tin-producing regions sometimes facing political instability or shifting regulations. 

On top of that, while it's not a major concern yet, advances in technology could reduce the need for tin or uncover substitutes in certain applications. And, like any commodity, tin demand can be impacted by broader economic cycles, particularly in industries like consumer electronics and automotive.

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Thanks for reading!

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Jason

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DISCLAIMER: None of this is financial advice. Finbrain is strictly for educational purposes.

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