The Overlooked Metal Behind the AI Buildout

Only the veteran members of our investment community here would remember the time the London Metal Exchange did something it had never done before. 

Back in October, 1985, it made the decision to stop trading tin.

For years, a group of governments had been buying up tin to hold the price steady. Then the money ran out.

The market went dark, and it stayed that way for years.

Now fast-forward 41 years, nobody is propping up anything…. And tin is back in the news.

Look, I know your average investor doesn’t keep tabs on tin prices. But this past June, tin hit a record of about $59,000 a ton.

Since then, prices have come back to earth around $51,000 a ton. 

Sounds like the story is over, right?

Well, not so fast. 

Remember, tin is still up roughly 42% from a year ago, and falling prices didn’t exactly fix the real problem lurking behind the scenes. 

And THAT is the thing that might stop you in your tracks. 

You see, the amount of tin sitting in the world’s visible warehouses (in London and Shanghai combined) only covers about 11 days of global demand.

But hey, tin isn’t exactly a metal that draws a ton of market interest; it doesn’t get the snappy headlines. 

Yet, nearly half of all the tin on earth is used for one thing: Solder. 

That’s the stuff that holds the chips onto the circuit boards. That means it’s utilized in every single phone and car in existence. 

Now, we can add the AI buildout to the list.

It’s a quiet metal with a tiny cushion, and a supply crunch that’ll put it on Wall Street’s radar. 

Think of it as a thread running through the whole economy. 

Pull on it, and things start to quickly unravel.

The AI buildout is where the demand-side of this story really comes into play. 

Some analysts suggest that tin demand linked to AI hardware will more than double over the next three years — to over 26,000 tons by 2030. 

Interestingly, more than half of that AI-chain demand doesn’t come from data centers at all. It’ll come from cars and automation… you know, the electronics backing machines that think for themselves. 

Data center chips are just a smaller slice of the pie. 

To be fair, this demand growth won’t necessarily cause a shortage. However, what it does do is make the market a little more jumpier when supply does slip. 

Always remember how small this market actually is. The world uses about 380,000 tons of tin a year, compared to the 25 million tons of copper that is needed. That makes tin feel more like a rounding error in size, yet it sits inside nearly everything with a circuit.

And you can bet that supply is slipping.

Over in Myanmar, the Man Maw mine in Wa State has been mostly shut since a mining ban in 2023. That helped cut the country’s output in half during 2024… and a full recovery isn’t expected until next year. 

In the world’s second-largest producer, Indonesia, its president ordered the closure of 1,000 illegal mines on two islands that produce much of the country’s tin. 

In fact, those illegal operations account for as much as 80% of the output there. Shutting them down may be the right call, but that decision takes a lot of supply off the market. 

Last May, Indonesia’s refined exports plummeted 40% from a year earlier. 

Then we have the Bisie mine in the Congo, which supplies roughly 6% of the world’s tin. At least, it was supplying that much until fighting erupted against rebels. 

In China, which makes roughly 50% of the world’s refined tin, imports have exceeded exports since late 2024. 

Now put this whole story today, and it leads to a market deficit. One model even projected a shortfall of about 9,000 tons this year, followed by an 8,000 shortfall in 2027. 

The International Tin Association sees that shortfall growing to 13,000 tons by 2030, unless a lot more money goes into new supply.

Of course, new mines don’t open overnight. 

You know as well as I do that they take years to bring into operation.

Granted, part of this spring’s price spike was a thin market overreacting, some of which has already reversed as the AI trade cooled off somewhat; prices are down about 14% from record highs. 

All that with an 11-day supply gap and three major supply sources in peril. 

That’s the situation we’re in.

Makes sense, right?

There’s no question that tin is a small, jumpy market. And I wouldn’t call any price a sure thing due to the fact that the building supply problem isn’t going away on its own. 

Again, nobody opens a new mine overnight. Although this gives a warning for tin, there’s an even bigger lesson looming close by. 

It’s the same story as rare earths. This may be an even more dangerous situation given that China processes about 99% of the world’s heavy rare earths, and America imports every ounce it uses.

And for years, Washington looked the other way. 

Well, those days will soon be behind us. 

In a couple of weeks, China’s pause on its latest export controls expires, and on January 1st the Pentagon bans Chinese-sourced magnets from its weapons.

The thing is, Trump isn’t waiting around anymore. Washington has already guaranteed a floor price of $110 a kilogram to MP Materials, and is funding new separation plants from Texas to Louisiana to upstate New York.

The goal is simple, dear reader: Break the chain that runs through Beijing.

No, it won’t happen overnight, and most of our new capacity won’t show itself until 2028. 

But THIS is where the early fortunes are made.