It is no coincidence that nickel and tin are the two strongest performing base metals on the London Metal Exchange (LME) so far this year.
Supply in both markets is dominated by Indonesia, where production and exports are being affected by delays in annual work permit approvals.
This is a relatively new phenomenon for nickel. Indonesia's production has exploded over the past few years and now accounts for more than half of global supply.
Tin's been here before. Indonesia has long been the world's largest copper exporter, and the flow of the metal to global markets has been disrupted several times in the past when the government tightened production and export rules.
The unfortunate thing about tin, however, is that its supply chain is subject to resource nationalism not only in Indonesia, but also in Myanmar's Wa state.
Double trouble
Indonesia exported 78,000 tonnes of refined tin last year, equivalent to about a fifth of global demand.
Exports have slipped to 55.4 tonnes so far this year, compared with 4,700 tonnes in January-February 2023.
The last time exports stopped completely was in August 2015, when authorities introduced "clean and clear" export rules to enforce environmental standards.
This time it was a change to the annual licensing system. Tin is likely to come under particular scrutiny because of Revelations about illegal mining.
The Chinese government has also made no secret of its intention to restrict exports as a lever to push the industry further downstream.
The company does not seem to have figured out how to replicate its nickel strategy in the tin market. But the threat to tin supplies in the rest of the world has not gone away.
Myanmar's semi-autonomous Wa state controls the Man Maw mine, one of the world's largest tin mines.
In August last year, all mining activities were suspended to allow for an audit of reserves. According to the International Tin Association (ITA), the suspension was partially lifted, opening up new labels for some smaller operators, although they will pay more export taxes.
However, Manmo's operations have yet to resume. The ITA said the delay could reflect a rethinking of the need to replenish its strategic reserves.
Amid the continuing uncertainty, one thing is clear. The ruling United Wa State Army aims to tighten its grip on the jewel in its mineral crown.
Driven by the same impulse to resource nationalism, Myanmar and Indonesia are working together to squeeze global tin supplies.
Surplus and inventory reconstruction
Tin markets are likely to absorb this double whammy in the short term.
The International Tin Association estimates that the world supplied 9,700 tonnes more tin than it used last year, a testament to the slump in demand in the electronics industry. Tin is used for circuit board welding.
Copper stocks registered on the London Metal Exchange (LME) and Shanghai Futures Exchange (ShFE) more than doubled to 15,400 tonnes during 2023.
Spot prices on the London Metal Exchange have been sliding recently as Indonesia's suspension of shipments drags on. Overall inventories have fallen 31 per cent since the start of January to 5,300 tonnes.
In contrast, the Shanghai stock market continued to rise during the Lunar New Year holiday, and the current level of 11,072 tonnes is the highest since the Shanghai Futures Exchange launched tin contracts in 2015.
The flow of raw materials from Myanmar's Mamo mine to Chinese smelters has fallen, but not as much as feared after authorities allowed surface stocks to be processed. Many Chinese operators also built up concentrate stocks ahead of the suspension in August.
China's refined tin production rose 1.8% year on year to 169,000 tonnes, according to Shanghai Metal Market, a local data provider.
Tin users are fortunate that the current supply disruption comes after a year of sluggish demand and restocking of raw materials and metals.
Future vulnerability
The concern for the tin market is how soon Myanmar and Indonesia can resume normal supply services.
LME tin for three-month delivery hit a seven-month high of $27,810 a tonne on Friday and is currently trading around $27,460 a tonne, up 9.0% since the start of the year.
Even assuming a quick recovery in Indonesian exports and mining in Myanmar, tin supplies look challenging in the coming months.
The longer-term threat is that future supplies could be disrupted as resource nationalism pushes both governments further down the path of export controls.
Tin's use as a solder for circuit boards makes it a key mineral for the current generation of electronics and the coming Internet of Things.
However, the company's supply chain is extremely vulnerable to Indonesian politics and the United Wa State Army.
This year's supply crunch may just be a foretaste of what is to come in the tin market.
