Read on Twitter
The steep backwardation points at this cycle having longevity and no large shadow inventory existing. But to figure out just how long this can last I've done some research about the 2009-2011 boom market in #tin and found some very interesting similarities and differences. https://twitter.com/NZed23/status/1358331645976219651
There appears to have been a shortage in semiconductors back then, as seen in these articles:
https://www.electronicsweekly.com/news/business/finance/capacity-famine-to-last-into-2012-2011-02/
https://www.newstatesman.com/politics/2010/08/semiconductor-shortage-looms-over-technology-industry
And as we all know, we're in the midst of a new chip famine right now due to covid19 + increased demand.
https://www.electronicsweekly.com/news/business/finance/capacity-famine-to-last-into-2012-2011-02/
https://www.newstatesman.com/politics/2010/08/semiconductor-shortage-looms-over-technology-industry
And as we all know, we're in the midst of a new chip famine right now due to covid19 + increased demand.
During this cycle, tin prices peaked at 33k/t before production ramped up to meet demand. A key difference between this cycle however is the lack of inventories to act as an buffer. As seen in this article:
https://agmetalminer.com/2011/01/17/tin-prices-to-hit-record-levels-in-first-half-of-2011/
Tin inventories in LME was around 16k t in 2011!
https://agmetalminer.com/2011/01/17/tin-prices-to-hit-record-levels-in-first-half-of-2011/
Tin inventories in LME was around 16k t in 2011!
With minuscule inventories and severe shortage in semiconductors, I really don't see why we won't breach 33k/t and make much higher ATHs. This POV is supported by the fact that the steepness in backwardation we have today was not even seen back then, and we've barely just started
