Solder costs still soaring

18 April 2007

Tin costs

IPC looks at the consequences of the record costs of tin and silver

With the costs of tin and silver reaching 19 year highs, the IPC’s Solder Products Value Council have released a paper detailing the impact that this may have on the supply of solder alloys.

The International Tin Research Institute (ITRI) has published a report forecasting a potential shortfall in tin availability in 2007. ITRI is projecting that global demand for tin will exceed production by 30,700 metric tons. The primary reason behind this shortage is a 30 percent reduction in tin exports from Indonesia.

The price of tin has always exhibited volatility, but since 2003 the price has remained in a range of $6,000 to $9,000 per metric ton. However, in the last 6 months the price of tin has increased over 40 percent and the price continues to climb. The negative impact of this price volatility on the electronics assembly industry is particularly acute due to the increased consumption of tin by our industry due to the accelerating transition to high tin lead free alloys.

Indicated in the chart, we see a cost increase for the tin in solder paste of 25 percent in the last 4 months and almost 116 percent since just the beginning of last year. This excludes the impact of the tremendous cost increase of silver in the same time period. Additionally, it does not include any other inflationary cost increases associated with the conversion of alloy to powder, manufacturing solder paste, packaging or other overhead costs.

Different market forces have also caused the price of silver to climb dramatically in the past 18 months. Silver was priced in the $7.00 to $8.00/troy ounce range through most of 2005. In late 2005 and early 2006, the price of silver climbed to more than $14.00 per troy ounce. One of the factors for the increase is growth in demand of silver due to the trend toward lead free and prominence of 3 percent to 4 percent silver bearing alloys to the electronics assembly industry.

A kilogram of SAC 305 solder paste contains approximately 0.85 troy ounces of silver. At $14.30 per troy ounce, this represents $12.22 in silver cost per kilogram of solder paste, before including any alloying, powder production costs, etc. This is contrasted to an estimated silver cost of $6.37 per kg of SAC 305 solder paste in 2005.

It is the Council’s recommendation that electronic assemblers stay in close communication with their soldering material suppliers regarding supply and availability during this unprecedented period of volatility in the market price of metals.

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