(Yicai) June 2 -- Tin has followed copper as the next viral "computing power metal," with tin futures in Shanghai soaring since the end of last year amid growing demand from artificial intelligence servers, optical modules, and advanced semiconductor packaging.

Tin futures on the Shanghai Futures Exchange have surged more than 33 percent this year as of yesterday, exceeding last year's total gain of 32 percent. In addition, the London Metal Exchange tin futures have soared nearly 40 percent.

Tin has become a key foundational material in advanced semiconductor packaging thanks to its excellent electrical conductivity, low melting point, and strong welding stability. The metal was previously mainly used in traditional consumer electronics and tin-plated steel plates.

AI, semiconductors, and computing infrastructure support the medium- and long-term demand for soldering materials, but in the short-term, the electronic soldering sector has entered a traditional off-season, said Fu Xiaoyan, senior director of the research institute of Nanhua Futures. The decline in the prices of photovoltaic cells and modules also indicates limited terminal profit margins, Fu noted.

The printed circuit board area of AI servers has increased by 133 percent to 700 percent from conventional servers, while the amount of tin used in PCB per server has jumped by up to 1.32 kilograms, according to a report by the research institute of Chaos Ternary Futures. The high-end rack solutions of Nvidia, such as NVL72, use 3.7 kg to 4.7 kg of tin per machine.

Not many Chinese mainland-listed firms focus on mining, smelting, or trading of tin, but those that do have seen impressive performance in the first quarter. Yunnan Tin Group reported that its net profit surged 74 percent to CNY870 million (USD128.6 million) from a year earlier, while revenue soared 60 percent to over CNY15.5 billion (USD2.3 billion), mainly thanks to a rise in product prices and sales.

Shares of Yunnan Tin [SHE: 000960] jumped by the daily trading limit of 10 percent to CNY43.19 (USD6.38) apiece as of 1.55 p.m. in Shenzhen today. The stock of peer Huaxi Nonferrous Metal [SHA: 600301] also surged 10 percent to CNY66.55 (USD9.84) in Shanghai.

In sharp contrast to the big profits of the upstream miners, the costs of downstream packaging and solder manufacturers are under continuous intense pressure. The most actively traded Shanghai tin futures contract rose to a record high of CNY439,000 (USD64,886) per ton, triggering a severe negative feedback, according to Nanhua Futures' weekly industry report.

Many downstream solder firms saw costs exceed selling prices, with the spot market trading almost coming to a halt, while procurement activities have shifted to a wait-and-see approach due to rigid demand.

The development of technologies such as AI will effectively boost tin demand, Changjiang Securities said in a weekly report on the non-ferrous metals industry released yesterday. The tight balance between supply and demand will continue to support the upward trend of the metal's price.

"The proportion of tin consumption by AI-related industries in the total tin consumption is very small," a non-ferrous metals analyst told Yicai. "In the short term, there is a possibility that the expected demand from the AI sector may be overestimated.

"If supply-side disruptions ease and production in Myanmar and Indonesia resumes at better than expected levels, speculative market sentiment may gradually subside," the analyst noted.

The willingness of downstream companies to pay high prices is limited, and some small and medium-sized factories have already reduced purchases due to fewer orders, according to a report by Ruida Futures. In the smelting sector, the output of refined tin is expected to decline, while some smelting plants that buy tin overseas are still operating at a loss, further affecting refined tin output.

Editor: Martin Kadiev