The Kuala Lumpur Tin Market (KLTM) and the London Metal Exchange (LME) are the key benchmarks for global tin prices. In 1877, tin became one of the first metals to be traded on the LME. The standard tin contract came into effect in 1912 and lasted until its suspension in 1985 due to a major crisis in the tin market; it was reinstated in 1989. The LME contract is the internationally accepted hedging tool in the tin market. However, the physical spot market is centered in Kuala Lumpar where the KLTM opened for trading in 1986.
During the later half of the previous decade, the price of tin climbed dramatically due to increased demand, tightening supply, and investor interest in the commodities sector in general. In 2005, the tin price was around $6,000 per tonne due in part to an oversupplied market. During 2008, it jumped 53 percent from $16,000 per tonne to approximately $26,000 per tonne. This dramatic rise in prices for commodities in general was not sustainable, and was followed by a sharp drop for tin prices to below $10,000 per tonne. Lower prices in 2009 were attributed to decreased demand worldwide owing to the global economic slowdown. Overall prices in 2009 were substantially lower than those in 2008 and apparent consumption of tin in the United States declined by 17 percent in 2009 compared with that of 2008.
However, many analysts remain confident that the underlying fundamentals in the tin market will remain strong. Worldwide supply is expected to remain tight and demand is likely to rebound. Despite the 2009 decline in prices, tin producers continued to respond to the higher tin prices of recent years with tin mine and tin smelter openings and expansions, including ones in Canada, Bolivia, Australia, and Thailand. Tin exploration activity increased, especially in Canada and Australia. In some countries, like Bolivia, old tin tailings were being evaluated for the reclamation of the metal. Developments have continued in major tin-consuming countries to move to new lead-free solders that usually contain greater amounts of tin then do leaded solders.
