Dividends and Tin tops base metals as supply lull persists

In the world of commodity prices, the supply and demand charts from long ago are still the best charts to use. On the London Metal Exchange (LME) the commodities prices are determined.

In an article from Andy Home of Reuters for the first 6 months, the price of tin is trading around $31,800 a tonne or up 51% this year. Aluminum prices are up 25% and copper is up 21%.

The tin demand has not stopped but supply has. COVID has shutdown production in Indonesia and Malaysia.

Malaysia Smelting Corp which last year produced 22,400 tonees of refined tin had been forced to shut down and was already struggling with a furnace problem. One of the older furnaces has slowed production and the company has warned production will not be up to prepandemic levels until the end of the year.

Indonesia, the world’s largest exporter of tin has been struggling to lift production despite the higher prices. Exports were down 3% to 26.900 tonnes in the January to May period.

Linking to dividend paying stocks, there are some sectors that can be easily viewed by the supply and demand lens and they are simple to understand. How is the supply? What is the demand? Ideally, the bulk of your investments should not be tied to supply and demand stocks because although you can make a great deal of money on the upside, the cycle means you lose the money on the downside. Ideally the bulk of your money should be tied to companies which are profitable over any all cycles either through a monopoly or monopoly like conditions. In this fashion, stock prices go up, they go down, but on the long term your dividends and higher multiples for profitable companies means your wealth goes up.

There are more questions than answers, till the next time – to raising questions.

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