Myanmar Earthquake Sparks Concerns Over Wafer Production in China and Global...

CFP

TMTPOST -- A powerful 7.9-magnitude earthquake struck central Myanmar, causing significant tremors in China’s Yunnan province that borders the southeastern Asian country.

According to the China Earthquake Networks Center, the earthquake occurred on Friday at 14:20 (Beijing time) in Myanmar (21.85°N, 95.95°E) with a depth of 30 km.

The quake has had a major impact on the western regions of China, which are critical to photovoltaic silicon wafer production, according to SMM.

The effects have extended as far as Yinchuan and Inner Mongolia, though disruptions in these areas have mainly been limited to power line failures, which are expected to be resolved in the short term.

In the entire Yunnan province and Yibin prefecture of Sichuan province, the damage has been more severe, with reports of equipment failures such as furnace shutdowns and explosions, which could impact production over a longer period.

Meanwhile, although the epicenter not being directly located in the primary tin-producing region of Wa State in Myanmar, the earthquake has raised market concerns over global tin supply. On Friday, London tin prices surged nearly 4% intraday, while Shanghai tin futures saw a night-session increase of over 3%.

Market analysts highlight that Myanmar is a crucial player in the global tin supply chain, and disruptions from the earthquake could hinder the ongoing efforts to resume tin mining operations. This could further tighten supply, with tin prices potentially reaching 300,000 yuan per ton within the year.

Myanmar plays a key role in the global tin supply chain. Data from the U.S. Geological Survey (USGS) shows that global tin reserves have been declining over the past two decades. In 2023, Myanmar ranked among the top three countries in both tin reserves and production, with Wa State accounting for 90% of the country’s tin output.

In 2024, tin mining operations in Wa State were suspended for months due to escalating armed conflicts, exacerbating the global tin supply shortage. On March 26, the Wa State Industrial and Mineral Management Bureau announced a meeting scheduled for April 1 to discuss the resumption of mining operations in the Manxiang region. However, the earthquake has added another layer of difficulty to these efforts.

“The earthquake may have a direct impact on the tin supply chain,” said Gu Fengda, Chief Analyst for Nonferrous Metals at Guoxin Futures. He pointed out that potential mine collapses, equipment damage, and casualties could increase the risk of short-term production halts. Additionally, Myanmar’s northern mountainous regions have weak infrastructure, and damaged roads could further hinder ore transportation and exports.

Guo Ning, Secretary-General of the Tin Industry Branch of the China Nonferrous Metals Industry Association, emphasized that although Wa State was not at the epicenter, the strong tremors could have damaged mine tunnels and infrastructure, delaying government approvals for resumption. Even if mines remain structurally intact, necessary safety inspections, aftershock risks, and logistical challenges could push back resumption timelines by one to two months, impacting tin supply.

The tin market has already been volatile due to frequent supply disruptions. On March 13, Alphamin announced a temporary halt to mining activities at the Bisie tin mine in the Democratic Republic of the Congo (DRC) due to escalating armed conflict in the region. As Bisie is one of the world’s most significant tin mines, the news triggered sharp hikes in both Shanghai and London tin prices.

Guo predicts that in 2024, the tin supply in China and the rest of the world as a whole deficit will exceed 20,000 tons. If Wa State’s production recovery falls short of expectations and African supply disruptions persist, the shortfall could widen to 30,000 tons by 2025.

While supply remains tight, tin demand has exceeded expectations. Since early 2024, a surge in photovoltaic module installations has driven demand for soldering tin, while the expansion of India’s electronics manufacturing sector and Europe’s renewable energy revival have further boosted consumption.

Guo noted that last year, tin prices as high as 280,000 yuan per ton could have led to cautious buying among downstream industries. However, with prices maintaining this level in 2024, procurement activity has remained robust, signaling strong actual demand. He expects that, barring new supply increases, continued inventory depletion could push tin prices above 300,000 yuan per ton within the year.

Regarding supply chain stability, Guo suggested accelerating domestic tin exploration and development. “If overseas supply disruptions persist, the market will remain highly volatile. It is crucial to speed up exploration efforts, whether for existing mines or new projects.”

For investors, Gu cautioned that the earthquake’s impact on tin prices will depend on the actual damage to Myanmar’s mining infrastructure. However, bullish sentiment will likely drive prices higher in the short term. He advised investors to closely monitor developments in the affected areas while remaining wary of excessive volatility driven by market speculation.