SMM February 27 News:
On February 26, the Wa State Industrial and Mineral Management Bureau issued the "Procedures for Applying for Mining, Beneficiation Plant, and Exploration Licenses." Most market participants interpreted this announcement as a signal of the imminent resumption of tin mining in the Wa State Manxiang mining area. The rising expectations of Wa State's production resumption drove tin prices down. Following the decline during the night session, LME and SHFE tin continued to weaken on February 27. As of 15:03 on February 27, SHFE tin was quoted at 254,010 yuan/mt, down 3.69%, while LME tin was quoted at $31,925/mt, down 1.48%.
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News
The Wa State Industrial and Mineral Management Bureau issued the "Procedures for Applying for Mining, Beneficiation Plant, and Exploration Licenses."
The content of the "Procedures for Applying for Mining, Beneficiation Plant, and Exploration Licenses" issued by the Wa State Industrial and Mineral Management Bureau includes:
1. Companies requiring mineral licenses must first submit written application materials to the office of the Wa State Industrial and Mineral Management Bureau (application materials include: Wa State legal representative ID, business license, copies of property or land certificates in Wa State, and the application letter).
2. After registration and filing by the office, the application materials are handed over to the survey team for on-site investigation and survey to determine whether the conditions for application are met and to verify the coordinate range of the application project. The survey team then submits an on-site survey report to the office.
3. The survey team provides data such as license number, type, mineral type, range, and occupied land area to the pricing group, which calculates all fees according to management fee standards and prepares a table for submission to the office and finance department.
4. Based on the survey team's report, the office and survey team prepare the "Wa State Myanmar Exploration Project Application Form" and submit it to the bureau leadership for approval. Once approved, it is forwarded to the Central Economic Planning Committee for instructions.
5. After approval by the Central Economic Planning Committee, the relevant license holder is notified to go to the finance department of the Industrial and Mineral Bureau to pay the approved license fees, and a receipt is issued by the finance department.
6. The company representative collects the relevant license documents from the office upon presenting the payment receipt.
Spot
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Regarding tin spot prices: According to SMM quotations, SMM #1 Tin spot price on February 27 averaged 255,000 yuan/mt, down 7,300 yuan/mt from the previous trading day, a decrease of 2.78%. Most market participants interpreted the "Procedures for Applying for Mining, Beneficiation Plant, and Exploration Licenses" issued by the Wa State Industrial and Mineral Management Bureau as a precursor to the resumption of production in the Wa State Manxiang mining area, leading to a significant drop in tin prices. Currently, market sentiment is bearish, and many participants are still observing whether tin prices will decline further before deciding on procurement and restocking.
Outlook
Macro front: Domestically, with the Two Sessions approaching, attention should be paid to whether any favorable policies will be introduced to strengthen tin prices. Internationally, close attention should be paid to the impact of US tariffs on tin and other non-ferrous metals, as well as the US PCE data to be released on Friday, which will provide guidance on the US Fed's interest rate path. Market volatility is expected to increase before the Fed's interest rate meeting.
Fundamentals side: Inventory side: Tin inventories at the two major exchanges showed divergence. LME tin inventory hit a new low in over a year, with the latest level on February 26 at 3,700 mt. As of the week ending February 21, SHFE tin inventory increased from 6,006 mt to 7,112 mt. Further attention is needed on news related to Wa State's production resumption, developments in the armed conflict in the DRC, and whether the decline in tin prices will significantly boost downstream consumption demand, thereby driving domestic tin inventory destocking.
Technically, SHFE tin 2503 contract broke the key support level of 260,000 yuan/mt and is fluctuating within the range of 252,000 to 255,000 yuan/mt in the short term. The MACD indicator shows increased bearish momentum. Attention should be paid to the support strength at the 250,000 yuan/mt psychological level. Additionally, caution is needed regarding potential technical pullbacks if downstream orders recover less than expected.
Institutional Comments
Jinyuan Futures pointed out: Overall, the Wa State Industrial and Mineral Management Bureau's announcement of the procedures for mining license applications strengthened expectations of tin mine production resumption, causing tin prices to plunge. However, even if tin mines officially resume production, it will take time to reach output levels. In the short term, the tight supply of raw materials persists. After market sentiment subsides, shorts are reducing positions. Tin prices are expected to fluctuate downward, with attention on the 40-day moving average support and news of Wa State's production resumption.
Everbright Futures stated: Last night, the market was suddenly disrupted by news of Wa State issuing procedures for mining license applications. The domestic market pulled back significantly. Over the past two weeks, Wa State has frequently issued documents related to production resumption processes, and prices may weaken due to news disturbances. LME fund net positions continued to increase last week, with net long positions reaching a nearly five-year high, indicating sustained overseas bullish sentiment. The divergence between domestic and overseas markets may lead to considerable short-term price fluctuations. If the SHFE/LME price ratio declines, arbitrage opportunities between domestic and overseas markets may arise for low-level entry.
