Summary of Key Points
The surge in demand for AI computing power has labeled tin as a "computing metal," with its price rising by 40% within half a year (LME tin futures up nearly 40% this year). Related A-share stocks (such as Huaxi Nonferrous Metals and Xiyeh Shareholding) have performed contrary to the trend. Upstream tin mining companies (like Xiyeh Shareholding and Xingye Yinsi) have seen substantial earnings growth in the first quarter, but downstream packaging manufacturers are facing cost inversion due to high tin prices, leading to a halt in spot trading. There is disagreement within the market about whether the price premium driven by AI demand will persist: some institutions believe that AI will support tin prices, while others argue that the proportion of AI demand is still small and that supply recovery could lead to a decline in speculation, potentially resulting in tin prices remaining volatile at high levels in the short term.
Detailed Analysis
#### 1. Why Has Tin Become a "Computing Metal"? AI Demand Is the Key Driver
Previously, tin was mainly used in consumer electronics (such as mobile phone motherboard welding) and tin-plated iron sheets for canned goods. With the rise of AI, its uses have expanded—AI servers, optical modules, and advanced semiconductor packaging require large amounts of tin. For example, the circuit boards (PCBs) in AI servers are 1-7 times larger than those in traditional servers, using up to an additional 1.32 kilograms of tin per unit; high-end NVIDIA AI rack solutions (like NVL72) can use as much as 3.72-4.71 kilograms of tin per server. It is estimated that the increased demand for tin from AI servers and AIPC (Advanced Packaging Components) will amount to about 15,000 tons by 2026, elevating tin from a common industrial metal to a commodity closely tied to AI computing power.
#### 2. Upstream Companies Are Profiting, but Downstream Manufacturers Are Facing Cost Inversion
The sharp rise in tin prices has benefited upstream mining companies:
- Xiyeh Shareholding reported revenue of 15.5 billion yuan (up 59.86%) and net profit of 868 million yuan (up 73.71%) in the first quarter;
- Xingye Yinsi's net profit surged by 257% year-on-year to 1.338 billion yuan;
- Huaxi Nonferrous Metals achieved a gross margin of 41.51%, essentially earning 40% on every yuan sold.
However, downstream packaging and solder manufacturers are struggling:
With tin prices at 439,000 yuan per ton, the cost of purchasing tin exceeds the revenue from selling products (cost inversion), leading many to refrain from buying and causing a near-stop in the spot market. This creates a stark contrast within the supply chain: while upstream companies are reaping profits, downstream manufacturers are struggling to survive.
#### 3. Disagreement Among Institutions: Has the Valuation Logic Changed? Is the AI Premium Reasonable?
Previously, tin was considered a cyclical commodity whose price fluctuated with economic trends. Now, the market is pricing it based on its role as an "AI resource," linking tin prices to the shipment volume of AI servers and the iteration speed of optical modules, which has led to a premium.
- Optimists (Changjiang Securities, CICC, Huatai): AI demand will continue to drive up tin prices, and the tight supply-demand balance will support price increases, with upstream companies enjoying significant performance gains.
- Cautions: The proportion of AI demand in total tin consumption is still small, and if tin mines in Myanmar and Indonesia resume production ahead of schedule, speculation may fade, potentially eroding the premium.
#### 4. Can the AI Premium Persist? Several Risks Need to Be Considered
For the premium to continue, several hurdles must be overcome:
- Macroeconomic Pressures: High inflation in the United States could keep interest rates high, suppressing tin prices (as tin is a commodity, higher dollar and interest rates increase its cost).
- Downstream Feedback: If downstream manufacturers stop buying tin, smelters may reduce production, leading to a vicious cycle of rising prices, declining demand, reduced output, and further price fluctuations.
- Supply Recovery: If tin mines in Myanmar and Indonesia resume production faster than expected, increased supply could lower prices.
- Solar Market Weakness: Declining prices and increasing inventory in the solar sector will reduce the demand for tin used in photovoltaic cells.
#### 5. What Will Happen to Tin Prices in the Short Term?
Institutions like Ruida Futures predict that tin prices will fluctuate between 392,000 and 435,000 yuan per ton in the short term. The reasons include:
- Slow recovery of overseas tin mines and low processing costs, resulting in limited production of refined tin (tight supply);
- Limited acceptance of high prices by downstream manufacturers, with smaller companies already reducing their purchases (weak demand).
In summary, the current trend of tin as a "computing metal" is driven by AI demand, but it is still in a phase where expectations exceed reality. While upstream companies are benefiting, downstream manufacturers are under pressure. Whether the premium will persist depends on whether AI demand can sustain growth and whether there are any issues with supply. Investors should be cautious of price volatility, as prices are already quite high.