In the second week of 2026, on the first trading day, the Shanghai Tin 2602 main contract saw increased positions and hit the limit-up, rising to a high of 376,000 yuan, marking the highest point since the short-term surge on March 8, 2022, which was driven by escalating tensions in the Russia-Ukraine conflict. Towards the end of last year, trading capital in the tin market was highly active, with a noticeable year-end rally on the annual chart. It is generally believed that the sustained price increase reflects the culmination of long-term supply disruptions, primarily centered around the整顿 (rectification) of the Wa State tin industry in recent years, combined with strategic metal premiums driven by the pursuit of investments in the prevailing theme of intelligent computing semiconductors. Since the Shanghai Tin weighted index broke through the 300,000 yuan psychological barrier in late November last year, the cumulative gain in the domestic tin market has reached 25%, approaching the peak levels seen in 2022. Amidst strong price-volume correlation, the enthusiasm for capital allocation and front-running is high. In the short term, although there are no clear reversal signals yet, it is advised to be cautious of the price peak risks in the tin market.
The long-term consumption structure of tin relies on the high growth rate of demand for electronic solder. With Shanghai Tin prices rising to the 300,000-350,000 yuan range, the high-price characteristic is evident. In December, the Tin Branch of the China Nonferrous Metals Industry Association issued a "Proposal," and last week, the Tin Solder Materials Branch of the China Electronics Industry Association published an "Initiative on Jointly Fostering a Healthy and Rational Solder Market Environment," reflecting the negative pressure of rapidly rising raw material prices for tin and silver on solder production enterprises. According to ITA data, by 2025, tin used in electronic solder is expected to account for 34% of global refined tin consumption, photovoltaic solder for 12%, and industrial solder for 7%. In other consumption areas, tin chemicals account for 16%, tinplate 11%, lead-acid batteries 8%, copper-tin alloys 5%, and others 7%.
Bullish funds categorize tin as a "computing power metal," expressing considerable optimism regarding its high growth rate in the intelligent computing chip sector, which is based on the global semiconductor sales cycle, and the demand for higher-density integrated circuits linked to the increasing penetration of new energy vehicles. Over the next five years, against the backdrop of an expected downward revision in the global average annual compound growth rate for photovoltaic installations to around 5%, consumption related to integrated circuits or PCBs is viewed as the most promising area for incremental demand. This implies that the global tin consumption structure will shift again, with sunset consumption sectors facing significant negative growth pressure, and consumption becoming more concentrated in the electronic solder sector. Consequently, global tin consumption growth could potentially achieve an average annual compound growth rate similar to copper's near 2%. ITA data shows that the global tin consumption average annual compound growth rate was only 0.25% from 2010-2025, increasing to 1.1% from 2020-2025.
In the short term, last week's annual Consumer Electronics Show (CES) reaffirmed the technological trends of AI computing power, robotics, autonomous driving, and smart homes. Simultaneously, data from the Semiconductor Industry Association (SIA) showed that global semiconductor sales reached $75.3 billion in November last year, a year-on-year increase of 29.8% and a month-on-month increase of 3.5%. Furthermore, the global chip market is projected to continue significant growth in 2026, with annual sales expected to reach nearly $1 trillion. It is believed that due to the full-scale push in AI investments in 2025, the roughly four-year global semiconductor upcycle might extend into the first half or even the third quarter of 2026. This sector is expected to underpin tin consumption growth for a considerable part of this year.
Under high tin prices, the rigidity of essential demand will become more apparent as demand weakens. The renewed acceleration of the tin market at high levels, driven by capital allocation, resembles the performance of equity benchmarks, directly realizing long-term expectations for incremental tin consumption. However, returning to futures market pricing, on the consumption side, market expectations may have overestimated the growth in tin consumption driven by the high growth in the intelligent computing semiconductor sector and underestimated the weakness in tin demand from traditional sectors. Since December, the suppressive effect of high prices on domestic tin-related demand has become increasingly evident. Now, in mid-January, although the Spring Festival is later this year, following the delivery of the 2601 contract, seasonal weakness is dominating consumption. Third-party research indicates平淡 (flat) orders in traditional consumption sectors, a generally moderate performance in the photovoltaic industry, with module production schedules already contracting in December. Mysteel expects January production schedules might still decrease by 12.54% month-on-month. On the policy front, news of the cancellation of export tax rebates for photovoltaic products effective April 1st might boost production and sales of related products in the first quarter, but its stimulating effect on tin consumption is more likely to be a short-term pulse, making it difficult to form sustained incremental demand expectations, with limited long-term impact.
On the spot market, the rapid rise in tin prices means third-party spot quotations primarily follow the upward trend, with significant daily fluctuations in spot premiums/discounts, offering only limited reference value. Amid the strong price-volume trend, some essential demand buying is still occurring through pricing. Last week, both spot and futures prices showed some resilience around the 350,000 yuan level. SMM and Mysteel social inventories decreased by 1,042 tons and 1,233 tons respectively, to 7,478 tons and 9,309 tons. Currently, both domestic social inventories and LME inventories are higher than the levels seen in the same period last year. The combined inventory across both markets is close to 13,000 tons, significantly higher than the 6,500-ton level seen at the price peak in March 2022. It is expected that domestic consumption will gradually weaken in the second half of January, and mid-to-downstream sectors might start holidays early in February.
The tin price rally since November has continuously amplified geopolitical disruptions. In reality, the security situation in eastern Democratic Republic of Congo (DRC) has not affected the normal production of the major miner Alphamin. Short-term disruptions to mining transportation due to border closures in neighboring countries were also resolved relatively quickly. Nigeria has not ultimately banned illegal mining production in some provinces. In South America, the situation in Venezuela has attracted rapid capital attention to the博弈 (game) surrounding the region's advantageous mining resources. Actually, from January to October last year, Venezuela's exports of tin concentrate to China accounted for 2% of the total, indicating a limited overall share. Mining production conditions in Bolivia are basically stable, and it is currently the largest exporter of tin concentrate to China from South America, at a level of about 5.2%. The premium associated with South American situations has had a relatively muted actual impact on tin ore supply, primarily fermenting at the capital level.
From a balance sheet perspective, supply pressures in the tin ore market are expected to be even tighter in 2025. In 2026, increments are anticipated from Myanmar's Wa State, Indonesia, and Africa. The ITA's global tin-in-concentrate增量 (increment) expectation for 2026 is 18,000 tons, a relatively conservative forecast with a high probability of realization. Considering that resumed production in Wa State would need to restrict export flow rates from the perspectives of实物税 (physical tax?) and inventory rebuilding, the globally tradable supply of tin concentrate is expected to increase by about 20,000 tons. Tin-in-concentrate production growth is forecasted to be between 23,000-25,000 tons, with a growth rate of at least 6%, exceeding demand growth. In the first quarter, the tin market仍需关注 (still needs to monitor) the resumption of production in Myanmar's Wa State, the整顿 (rectification) of Indonesia's tin industry, and the geopolitical situation in eastern DRC. In the second quarter and the second half of the year, incremental supply from the mining side is expected to gradually materialize, with changes in domestic processing fees serving as an important signal.
In the short term, it is estimated that tin-in-concentrate exports from Myanmar to China in December continued to increase to 1,500-1,800 metal tons. Although the beginning of the year is typically a seasonally weak period for Indonesian tin ingot exports due to approval policies, December export volumes last year were still somewhat assured. From the perspective of domestic smelter production schedules, Mysteel data shows that domestic refined tin output in December was 15,895 tons, a month-on-month increase of 2.61%. The cumulative refined tin output for the full year was 174,400 tons, a cumulative decrease of 1.65%. Expectations for January production are temporarily held stable at around 14,000 tons. Due to active gains in the non-ferrous metals sector driven by precious metals in China, domestic spot prices, and even three-month imported tin ingots, have become profitable. It is expected that the impact of weak consumption amidst subdued supply and demand before the Chinese New Year will be more significant, and continued tracking of domestic social inventories is recommended.
In terms of the supply-demand outline, the inclination is that 2026 will be a year when tin concentrate supply transitions from tight to loose, with higher certainty. Supply changes in the second quarter could gradually drive a rebalancing of the tin market. Simultaneously, even though demand growth for semiconductor solder is strong and may fundamentally ensure tin's long-term average annual consumption growth rate, the supply growth rate of tin ore in 2026 is highly likely to exceed demand growth, potentially by a significant margin. Therefore, the price surge during the year-end period (including the Lunar New Year) might form the top trading range for tin prices in 2026.
Currently, both the price and volume of the Shanghai Tin weighted index are approaching record levels since its listing. The Shanghai Tin VIX in the options market hit a new high again on Monday. The price performance diverges from the supply-demand environment of the off-season. Under the strong bullish trend, the risk of being short is high. It is suggested to continue focusing on short-term trading of out-of-the-money short call options. If exercised eventually, rolling over to deferred months would be the primary strategy. Regarding price expectations driven by capital inflows, LME Tin is expected to challenge the record high of $48,000-$50,000, corresponding to a Shanghai Tin main contract price of 380,000-396,000 yuan.
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