Commodity Trading In Tin, Focus On Base Metals

With base metals fuelling huge economic development in Asia, commodity trading in tin is one way of capitalising on this phenomenal trend in natural resources markets.

The main uses of tin are for tin plating (33%), an alternative to aluminium for packaging, as solder in electronics and manufacturing chemicals used for a wide range of products from fire retardants to pesticides.

In fact, tin demand has increased in recent years because of the three fold increase use of the metal in solder, as its lead content has been eliminated on environmental grounds.

Commodity trading in tin

If you want to gain exposure to the price action of this base metal you could either trade tin futures contracts on the LME or gain exposure using a base metals ETF which tracks one of the major commodity indexes.

Equipped with an appropriate and tested commodity trading system and an electronic trading platform which you are comfortable with, all that remains is to gather some fundamental analysis which can give you an overview of the tin market you are about to enter.

A closer look shows that 88% of mining production in 2006 was concentrated in just four countries, namely Indonesia (36%), China (35%), Peru (12%) and Bolivia (5%).

When we consider that it is the high growth rates in the new BRIC (Brazil, Russia, India, China) economies that is driving the commodities bull market, significantly both Brazil and Russia each showed 37% declines in mining production over the decade to 2006.

The next stage in the process is smelting the tin ore or cassiterite using carbon as reducing agent and a temperature of over 1200 centigrade.

It is possible to use electrolysis to increase further the purity of the tin if required.

World refined tin production over the 10 years to 2006 increased 47% to 349,000 tonnes.

China (37%), Peru (12%) and Indonesia (22%) made up the vast bulk of refined production in 2006.

Where is tin consumed?

Refined tin consumption can be split roughly into two areas, namely the BRIC economies which took up about 37% of 2006 consumption of 365,000 tonnes.

Of the BRIC nations, China was by far the major consumer, taking 86% of the amount consumed by this group.

The other major group is made up of the mature economies of Japan, South Korea, Germany and USA, which took up 34% of the refined metal in 2006, according to WBMS.

The picture is one of the emerging economies offsetting the fall in demand from the more developed countries.

World commercial stocks of tin, held at the London Metal Exchange and by various countries, have barely moved over in the 10 years to 2006.

But the US strategic reserve fell from 101,000 tonnes in 1997 to only 15,400 tonnes in 2006.

Looking forward to the future of commodity trading in tin. With the passage of time the demand and supply dynamics for tin or any metal or commodity will change given the large number of variables in the real economy.

Some of you will follow closely the trend indictors in your chosen commodity trading system while others may wish to combine that approach with up to date news on tin data.

Over the coming months occasional articles and news items about tin and the other base metals will appear on the site blog and other pages.







Commodity trading in other base metals:

Lead Copper Aluminium Nickel Zinc

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