COMMODITIES-METALS: Western Tin Market Anticipates Deficits

LONDON, Nov 24 (IPS) - A substantial deficit will be recorded in the tin market next year -- backed up by recent dramatic withdrawals from London Metal Exchange (LME) stocks.

Strength in the base metals complex as a whole is underpinning tin and prices are expected to firm in 1995, said British-based Billiton Metals in a recent report.

Some of this strength has come from fund interest and options- related buying in the market but the fundamental picture of the metal has improved sharply, said the analysts.

The major use of tin is still for tinplate. This accounted for 31 percent of total demand in 1990, a fall from 1980's level of 38 percent. This decline started in the 1960s, but started accelerating in the next decade as aluminium took its place in the beverage can market.

New advances in technology further depressed demand for tin. Hot dipped plating was replaced by electrolytic coating which required thinner coatings and thus less tin.

By 1982, tin accounted for 10.7 percent of the beverage can market, and in 1991 this had fallen even deeper to just 3.4 percent.

But a growth area for the use of tin is in the food packaging sector where more than 60 percent of tinplate is consumed by the industry.

"Aluminium's success in penetrating the beverage can market has not been repeated in the food can market," argues Angus MacMillan of Billiton.

In the vitally important U.S. food packaging market, where fast food trends are a signpost for the future, tinplated steel cans accounted for 92.5 percent of the market in 1991. Aluminium could muster just 7.5 percent.

Another area where technology is benefitting tin is in solders. This use increased from 25 to 28 percent between 1980 and 1990. Within solders, tin's primary use is in circuit boards and micro chips. The major growth demand comes from the newly-industrialised economies of Southeast Asia.

But the most rapidly growing end-use for the metal is in the chemical industry, which has more than offset the fall off in demand from traditional users. Tin is used in PVC stabilisers.

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