Tin - Price and Exchanges

Price and Exchanges

Tin is unique among other mineral commodities by the complex "agreements" between producer countries and consumer countries dating back to 1921. The earlier agreements tended to be somewhat informal and sporadic; they led to the “First International Tin Agreement” in 1956, the first of a continuously numbered series that essentially collapsed in 1985. Through this series of agreements, the International Tin Council (ITC) had a considerable effect on tin prices. The ITC supported the price of tin during periods of low prices by buying tin for its buffer stockpile and was able to restrain the price during periods of high prices by selling tin from the stockpile. This was an anti-free-market approach, designed to assure a sufficient flow of tin to consumer countries and a decent profit for producer countries. However, the buffer stockpile was not sufficiently large, and during most of those 29 years tin prices rose, sometimes sharply, especially from 1973 through 1980 when rampant inflation plagued many world economies.

During the late 1970s and early 1980s, the U.S. Government tin stockpile was in an aggressive selling mode, partly to take advantage of the historically high tin prices. The sharp recession of 1981–82 proved to be quite harsh on the tin industry. Tin consumption declined dramatically. The ITC was able to avoid truly steep declines through accelerated buying for its buffer stockpile; this activity required the ITC to borrow extensively from banks and metal trading firms to augment its resources. The ITC continued to borrow until late 1985, when it reached its credit limit. Immediately, a major “tin crisis” followed — tin was delisted from trading on the London Metal Exchange for about 3 years, the ITC dissolved soon afterward, and the price of tin, now in a free-market environment, plummeted sharply to $4 per pound and remained aroun this level through 1990s. It increased again by 2010 due to rebound in consumption following the 2008–09 world economic crisis, restocking and continued growth in consumption in the world’s developing economies.

London Metal Exchange (LME) is the principal trading site for tin. Other tin contract markets are Kuala Lumpur Tin Market (KLTM) and Indonesia Tin Exchange (INATIN).