How to Invest in Tin
Tin is a silvery white metal that has been an important part of human history for centuries. The metal was first combined with copper to produce bronze, a crucial metallic object in antiquity. Several thousand years later, pure metallic tin was first produced ushering in the creating of pewter a popular choice for flatware and other dining equipment for centuries. Today, tin is heavily mined in Southeast Asia, China, and South America, although countries such as Russia and Australia also have large deposits as well.
Tin has a number of industrial uses across a number of sectors. Close to half the tin produced is used in soldering a process that joins two metallic surfaces together. Other popular uses of the metal are in tinplates, chemicals, and brass/bronze.
Investing in tin has appeal thanks to its widespread use in industrial applications and its ability to serve as a hedge against the U.S. dollar and inflationary pressures in certain environments. For those looking to achieve physical exposure a few options are available in the form of bullion or bars as well as a physically backed ETF that trades on the London Stock Exchange. However, due to the metal\’s low value to density ratio, costs can be high for storing large quantities. Due to this, some investors may want to consider purchasing stocks of companies that mine tin instead. Unfortunately, tin is generally mined in conjunction with other metals and the vast majority of the product comes from emerging markets suggesting that it may be difficult to achieve exposure in the equity market. Lastly, for those seeking to achieve exposure via futures contracts, they do trade on the London Metal Exchange while an ETN is available in the U.S. that holds futures contracts of the metal.
Ways to Invest in Tin
There are 2 ways to invest in Tin: ETFs and Futures. Click on the tabs below to learn more about each alternative.
What are Tin ETFs?
Exposure to tin is included in many basket metals exchange-traded products, generally along with copper, nickel, lead, and aluminum. For those seeking to isolate exposure to tin, the iPath Dow Jones-UBS Tin ETN (JJT) is the best option available. This ETN is linked to an index comprised of tin futures, meaning that returns will not necessarily mimic changes in the spot price of the metal. It should also be noted that JJT is an ETN, meaning that investors are exposed to the credit risk of the issuing institution but will be available to avoid tracking error.
International investors may have more options available to them for exposure to tin through ETPs; ETF Securities offers leveraged and inverse tin products, as well as a physically-backed ETF that may be appealing to those looking to avoid the nuances of futures contracts.
What are Tin Futures?
Tin futures are traded on the London Metal Exchange under the contract code SN. The lot size for LME tin futures is 5 tonnes (+/- 2%) for tin of 99.85% purity (minimum) conforming to BS EN 610:1996. Tin futures are priced in U.S. dollars per tonne, and clearable currencies include the U.S. dollar, yen, pound, and euro.
Resources for more information on LME tin futures:
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Caution: Tin Slumps Into Bear Territory
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The Best and Worst Industrial Metals ETFs of 2012
All About The Tin ETF (JJT)
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