[SMM Tin Morning Brief: The Most-Traded SHFE Tin Contract Maintained Wild Swings, Spot Market Trading Remained Sluggish]

As major global technology companies rush to buy memory chips, SK Hynix is being actively courted by these companies, which have proposed plans to invest in its new production lines and finance the purchase of expensive manufacturing equipment. According to six people familiar with the matter, the company's clients have presented multiple partnership proposals to the South Korean chipmaker, including investing in the construction of dedicated memory production lines. Three other people familiar with the matter said another proposal involves clients providing financing for equipment purchases, such as ASML's extreme ultraviolet lithography machines. These machines are used to etch circuits on wafers and are worth hundreds of millions of dollars. The chipmaker is reportedly cautious about accepting financial commitments from clients, as such deals could make it beholden to specific buyers and force it to supply chips at lower prices in exchange for longer-term, more stable revenue guarantees.

Risk appetite has improved notably in the market recently, and SHFE tin rode the momentum to rally sharply in succession. Futures prices have successfully breached the 400,000 mark, hitting a new high in over two months, with extremely strong performance. What factors are supporting the tin price rally that is in full swing? Can the bullish stance continue? Middle East Tensions Ease, Risk Appetite Recovers Since the sudden escalation of Middle East geopolitical tensions in late February, affected by changes in inflation expectations caused by wild swings in energy prices, global equities and most commodity prices have exhibited a seesaw effect with energy products. Recently, the Middle East situation has been rapidly evolving, market risk appetite has fluctuated accordingly, and SHFE tin futures—whose price movements have always been susceptible to sentiment—have seen significantly amplified fluctuations. During the holiday, the US pushed the so-called operation to clear stranded vessels in the Strait of Hormuz, US-Iran conflict escalated sharply, the ceasefire agreement was in jeopardy, and market risk appetite weakened at one point. However, after the holiday, positive news from US-Iran negotiations emerged repeatedly. US President Trump posted on social media on the evening of May 5 (Eastern Time), stating that the "Freedom Plan" to "clear" vessel passage through the Strait of Hormuz would be suspended in the short term. On May 6, Trump expressed optimism multiple times about reaching a deal with Iran, saying the US and Iran had "productive" dialogue over the past 24 hours and that a final agreement was "very likely." Additionally, according to multiple White House officials and informed sources, both sides are extremely close to reaching a one-page memorandum of understanding. Based on the current statements from both sides, hopes for ending the conflict are rising, energy prices have pulled back sharply, risk appetite has improved notably, providing fertile ground for tin price gains. Semiconductor Stocks Launch a Bull Feast, Optimism Spills Over It is currently earnings season for publicly listed firms. The latest quarterly results and outlooks from US chip giants have been quite impressive, with Intel, Micron, and others surging collectively, and the US Nasdaq index hitting new highs repeatedly. South Korea's two memory chip giants Samsung Electronics and SK Hynix have soared sharply, while A-share listed Cambricon touched a high of 1,966 yuan, reflecting the resonance between booming industry performance and macro tailwinds. Since tin is an indispensable material in chip manufacturing and packaging, against the backdrop of semiconductor stocks rallying collectively and the computing-power metal narrative continuing to unfold, demand expectations for the tin market are highly optimistic. Leading tin stocks surged sharply on the boost, and driven by futures-equity linkage sentiment, capital has flooded in. SHFE tin saw significant increases in open interest over two consecutive days while rising, and futures prices are now just one step away from the previous high. Demand Side Rich in Narratives, Social Inventory Running at Low Levels Returning to tin's own supply-demand fundamentals, structural tightness on the ore side continues to constrain tin ingot output, and policy uncertainties along with supply disruption news from major overseas producing regions frequently impact tin prices. Currently, Myanmar's production resumptions are progressing slower than expected, and with the rainy season approaching, production may remain constrained. Although Indonesia's export quotas have increased somewhat, policy remains unstable, and recently a phased supply gap has emerged due to export license renewal procedures. Customs data showed that tin ore imports exceeded 17,000 mt in each of the first three months of this year, all with significant YoY increases. China's refined tin output is in the ramp-up stage, and institutions will also successively release April production data soon, so supply recovery warrants continued attention. The tin market's demand side has relatively strong support, and under the computing-power metal concept, there are many tradeable themes that frequently provide upward momentum for tin prices. Since AI servers and other high-end chips require 3-5 times more tin solder than ordinary servers, the semiconductor industry's prosperity has become the main driver supporting tin price trends. Currently, the Philadelphia Semiconductor Index is at a high level of prosperity, having steadily broken through the 10,000-point mark, and global semiconductor sales also grew significantly in Q1, with tin solder demand expected to continue growing. NEV side, although growth has slowed down somewhat, NEV production and sales have rebounded quickly, and their tin consumption demand remains relatively stable. PV side, new PV installations are not expected to grow, but policy floor expectations exist. Meanwhile, traditional production and sales expectations for home appliances, consumer electronics, and other sectors are also relatively weak, and tin chemicals are unlikely to see much additional demand growth. During the traditional peak demand season of March-April, China's tin market performed moderately, with tin ingot social inventory declining to a nearly four-month low, reflecting seasonal destocking. However, with the recent sharp rally in tin prices, spot premiums for tin in China have narrowed significantly, and the sustainability of demand under high prices still warrants attention going forward. Overall, the recent tin price surge was truly a confluence of favorable timing, conditions, and sentiment—support from the macro front, sentiment, and supply-demand fundamentals were all indispensable. Currently, geopolitical tensions have eased, the constraint on risk assets has loosened, the prosperity of global semiconductor-related stocks continues, and optimistic sentiment still easily transmits to SHFE tin futures. The low open interest characteristic of SHFE tin also amplifies futures price fluctuations. However, it is worth noting that the Middle East situation is prone to reversals, and after the semiconductor sector has repeatedly hit new highs, one should also be wary of potential pullback risks—caution is advised before rushing to buy amid continuous price rises. (Webstock Inc.)

According to industry sources, a key executive from NVIDIA (NVDA.O) was scheduled to hold separate meetings on Wednesday with counterpart executives from Samsung Electronics and SK Hynix to discuss collaboration in physical AI. Madison Huang, Senior Director of Product and Technology Marketing for NVIDIA's physical AI platform, was visiting South Korea to expand partnerships in the field. The team she leads is responsible for Omniverse, NVIDIA's development platform for physical and industrial AI simulation applications, as well as the company's robotics platform that supports its industrial digitalization and physical AI strategy. Samsung Electronics and SK Hynix are major suppliers of memory chips used in NVIDIA's AI chips. NVIDIA also collaborates with these South Korean chipmakers to deploy large-scale GPU clusters to strengthen South Korea's national-level AI infrastructure and promote AI applications in robotics, factories, and industrial platforms.

SK Hynix is accelerating efforts to enhance the competitiveness of its 10-nanometer sixth-generation (1c) DRAM, and investment in extreme ultraviolet (EUV) equipment for this process node has increased approximately threefold compared to the original plan. Industry sources revealed that SK Hynix is focusing on advancing 1c DRAM technology for application in the seventh-generation High Bandwidth Memory HBM4E core chips and plans to deliver samples this year. As HBM's largest client, NVIDIA, plans to launch its next-generation AI accelerator "Vera Rubin Ultra" equipped with HBM4E in H2 of next year, SK Hynix must accelerate its R&D pace. Industry sources revealed that SK Hynix's 1c DRAM yield for general-purpose DRAM has risen to 80%. The company plans to convert more than half of its DRAM capacity to 1c process products this year and is expected to secure approximately 190,000 wafers of capacity by year-end.

As semiconductor demand surged, JX Advanced Metals Corporation, Japan’s semiconductor materials giant (JX Advanced Metals Corp., hereinafter referred to as JX Advanced Metals), plans to increase investment in chip and information technology materials. President Yoichi Hayashi said the company plans to invest about 100 billion yen ($623 million) annually across all business divisions, with a focus on chip-related businesses. Over the past three years, the company invested an average of 90 billion yen per year. JX Advanced Metals is one of the beneficiaries of the rapid buildout of AI data centers, and its clients include global chipmakers such as TSMC, SK Hynix, and Intel. This has prompted the company to shift from its traditional copper smelting business to chip and information technology materials. In an interview, Hayashi said, “I do not think we should blindly expand investment, but it would be a serious mistake to hesitate when there are clear opportunities. I believe now is the time for us to take certain risks.” As demand exceeded expectations, JX Advanced Metals raised its operating profit forecast for the fiscal year ending March 31 by 20. Sales of indium phosphide, a semiconductor material produced by the company, were strong, and the company said it will make additional investment to expand capacity. Hayashi said that, given tight supply and demand, the company was negotiating with clients to raise product prices. He added that the magnitude of the price increases varied by product, but did not disclose specific details. He believes the war in the Middle East will not have a significant impact on the company’s operations, but is monitoring developments closely. JX aims to achieve operating profit of 200 billion yen in growth segments, including its chip materials business, by the fiscal year ending March 2040. Operating profit for the most recent fiscal year was about 52 billion yen. (Wenhua Composite)

At first glance, the market reaction to the outbreak of war following U.S. and Israeli strikes on Iran appeared deeply counterintuitive.

[SMM Tin Morning Briefing: The Most-Traded SHFE Tin Contract Opened Sharply Higher in the Night Session and Then Rebounded in Volatile Trading, While the Spot Market Will Gradually Cool Down]

According to The Information, citing people familiar with the matter, Alibaba, ByteDance, and Tencent have turned to domestic chipmakers to ease pressure from the worsening global memory chip shortage. The companies are reportedly in talks to purchase more commodity memory chips (i.e., DRAM) and NAND flash memory from two Chinese firms. The report said that in recent months, Alibaba, ByteDance, and Tencent have sought additional chip supplies from Samsung Electronics and SK Hynix.

[Samsung, Micron, and three other major original manufacturers synchronize production cuts, with memory prices rebounding better than expected in Q2] According to Taiwan Economic Daily News, five major NAND original manufacturers have synchronized production cuts, leading to a contraction in supply and boosting the memory market. According to a survey, the top five NAND Flash manufacturers in terms of global market share, including Samsung, SK Hynix, Micron, Kioxia, and Western Digital, will all initiate production cut plans in the first half of 2025, with reductions ranging from 10% to 15%, to adjust the market structure characterized by oversupply. It is expected that memory prices will rebound better than anticipated in the second quarter.