Demand for tin solder has large room to grow
----Interview with Chen Luo
General Manager
Dongguan Shuangyuan Metal Material Co., Ltd.
- Shuangyuan Metal Material Co., Ltd., established in 2006, focuses on the tin solder industry for many years. At present, it has developed into a comprehensive enterprise integrating tin ingot trade and tin solder product production and processing. The company, with an annual production of 2,000t for tin solder and a monthly trading volume of 700t of tin ingots, takes "integrity first, quality-oriented" as the service tenet. The company, by carefully managing the enterprise operation, clients relationship and talents, has gained outstanding achievements in the excellent quality control and production capacity and has won the peer and the customer's extensive praise.
- Asian Metal: Welcome to the interview by Asian Metal Mr. Luo. Please introduce your company first.
- Mr. Luo：Dongguan Shuangyuan Metal Material Co., Ltd. was established in July 2006, and is located in No. 58, Dezheng Middle Road, Chang 'an Town, Dongguan City, Guangdong Province. Engaging in non-ferrous metal service supply, our business scope covers non-ferrous metal and tin chemical products and supply chain finance, etc. We have established long-term and stable cooperative relations with many smelters in Yunnan and Jiangxi, and is one of the main service providers of tin industry in the Pearl River Delta region. The company's business is mainly distributed in the Pearl River Delta region and the Yangtze River Delta region. Talking about our products, we mainly deal with business of tin ingot, lead ingot, antimony ingot, bismuth ingot, cadmium ingot, tin plate, tin ball, tin rod, tin bar, tin wire, stannous sulfate, stannous chloride, potassium stannate, sodium stannate, stannous pyrophosphate and other products. Our products are mainly used in food consumption (tinplate), communications, power, aerospace, consumer electronics, electronic components, medical, new energy and many other industries.
- Asian Metal: The state government has increased support for high-tech industries, especially photovoltaic and new materials industries since early in 2023. Would you please introduce the electronic solder industry development status quo and market size and development trend in China?
- Mr. Luo: In 2022, China's refined tin consumption reached about 181.9 thousand tons, of which tin solder accounted for more than 50%, and according to statistics, tin solder accounted for 65%, which was about 110,000 tons. In terms of the specific consumption structure of solder, the consumption from consumer electronics industry accouned for 26%, that from photovoltaic welding strips industry accounted for 24%, that from computers industry accounted for 19%, that from automotive electronics industry accounted for 16% and that from other industries accounted for 15%. From the domestic point of view, this year, the electronics industry in the first half of the year witnessed negative growth but recovered in the second half of the year, seeing a small growth overall for the whole year. In 2023, the output growth rate of China's electronic solder industry is about 5%. Globally, the market size of the global semiconductor industry was USD422.1 billion in 2023, down by 11% YoY, according to the International Semiconductor Association. It is expected to recover to USD487.5 billion in 2024, up by about 15% from this year and up slightly from USD474.4 billion in 2021. As Europe and the United States enter the rate cut cycle in 2024, we expect the demand of the electronics industry to increase by a certain amount next year compared with this year. From the perspective of national strategy, China has put forward the vision of carbon peak in 2030 and carbon neutrality in 2060. Photovoltaic, new energy and other industries have broad prospects in the future, and are expected to continue to maintain an annual growth rate of 10% in the next five years, which means that tin older demand has large room to grow.
- Asian Metal: What opportunities and challenges would the tin solder industry usher in under the support of national policy in the next five years?
- Mr. Luo: China accounts for about a third share of the roughly USD500 billion global semiconductor industry. The main challenge we face at present is that Europe and the United States continue to suppress the development of our country's science and technology industry. But the opportunities we face are unprecedented, such as the huge scope for import substitution. In the field of chips, our country has realized the basic replacement of 28nm mature process chips; As Moore's law comes to an end, and our country increases research investment in the chip field, 14nm and more advanced 7nm chips are gradually overcome, domestic replacement of the semiconductor industry is still the main theme of the next five to ten years. In the fields of photovoltaic and new energy, China occupies an absolute dominant position, realizing the coverage of the whole industrial chain, and constantly making breakthroughs in overseas markets, such as export and the establishment of overseas branches, and the use of tin in these industries would expand year by year.
- Asian Metal: China's tin solder industry is mainly based in South China, namely Jiangsu, Zhejiang and Guangdong. Compared with the East China market, how do you view the development prospects and development advantages of the South China market?
- Mr. Luo: The Greater Bay Area has a large number of excellent design and manufacturing talents. For example, SMIC has set up an SMIC South Lab in Shenzhen, and Guangdong is stepping up investment in 12-inch wafer industry. Dongguan, Foshan and other places, which are famous for manufacturing and processing, can well connect the manufacturing and processing functions of the middle and lower reaches. In addition, as a bridgehead for foreign capital to flow into the mainland, Hong Kong can well play the role of financial integration. According to exports by Shenzhen Yantian port, automotive, electronics and other industries accounted for a large proportion, so the South China market continues to cultivate a large number of solder enterprises. Especially this year, Huawei mate60 mobile phone went viral, the excellent trading of AITO, semiconductors are expected to help overcome the downturn in the past three years, driving the development of tin solder enterprises in the South China market.
- Asian Metal：What do you think of the TCs in South China this year? What about your forecast for future trends of TCs?
- Mr. Luo: When the prices of tin ingot fluctuated sharply, tin solder enterprises would adjust the TCs in different degrees to deal with the possible losses caused by the cost. This year, the prices of tin ingot fluctuated relatively smoothly compared with previous years, so the TCs changed little. TCs vary according to different industries. Such as low-end LED and other electronic products, TCs would generally stand at about RMB2-3/kg(USD0.28-0.42/kg), and those for high-end precision instruments or electroplating anode and other industries would maintain at RBM9-10/kg(USD1.27-1.41/kg). Entering 2024, we believe that the prices of tin ingot would go down first and then rebound, especially next year, the semiconductor industry is expected to recover from the bottom, the supply and demand pattern of the market would be better than this year, the inventory level would fall from the historical high, the prices of tin ingot are expected to gradually rise throughout the year, and the average price is expected to remain at RMB220,000-230,000/t (USD30,987-32,395/t), increased by 10% YoY. As the prices of tin ingot fluctuation is not obvious, we expect that the TCs would be stable on the whole next year.
- Asian Metal：Please introduce the usage of domestic tin ingot and imported tin ingot and the expectation of the trend of consumption.
- Mr. Luo: In 2022, the consumption of tin ingot in China was about 186,400 tons with 165,100 tons produced in domestic market and the net import was 21,300 tons (including 32,000 tons of imports and 10,700 tons of exports). As of November 2023, the net import was 24,000 tons, a slight increase over last year. Overall, the proportion of net imports is about 11%, which is not large. Our country is the world's largest tin consumption country, of which the proportion is about 50%. Overseas smelters, such as Indonesia, Malaysia and Peru and other places, the outputs have not changed much in the recent years, and their exports to China has a small growth, but the total amount is not large. In terms of forecasting, the tin solder consumption would continue to mainly rely on domestic supply and partially on import.
- Asian Metal：What plan does your company have in the next year?
- Mr. Luo: Our company would actively expand new application channels on the basis of the original business next year. We are interested in the fields such as battery industry, medical equipment industry and so on.
- Asian Metal：Thanks you for your wonderful sharing, we wish Shuangyuan a prosperous business.
- Mr. Luo: Thank you.
