September Rate Hike Probability Plummets to 22%, Low Inventory + Easing Trade Dual Drivers Resurface [SMM Tin Morning Brief]

Futures market
LME: The three-month LME tin contract closed at $55,245/mt on Friday, August 7, down 1.52%, with an intraday high of $56,000 and low of $54,900. After the non-farm payrolls data was released at 20:30, the US dollar and Treasuries tumbled while precious and base metals collectively strengthened. However, LME tin still ended lower in Friday’s electronic session, as the payrolls-driven tailwind had not yet fully materialised during the night session.
China (August 7 daytime session): The SHFE tin 2609 contract settled at 434,910 yuan/mt during the daytime session, down 440 yuan or 0.10%. It retreated after a rapid rise during the day but showed resilience against declines.

Macro: Non-farm payrolls plunged by 23,000, a huge miss; the probability of a September rate hike collapsed from 54% to 22%, reigniting the easing trade.
(1) US July non-farm payrolls were a huge miss. July added non-farm payrolls fell by 23,000 MoM, far below broad market expectations of an increase of 80,000–100,000. The unemployment rate pulled back to 4.1% (prior: 4.2%). May (129,000 → 63,000) and June (57,000 → 20,000) were revised down by a combined 103,000. Over the past 12 months, the average monthly gain was only 34,000, signalling persistently weakening momentum in hiring.
(2) The lower unemployment rate stemmed from a contraction in labour supply rather than expanding employment. In July, the total labour force contracted by 264,000 MoM, with the participation rate falling to 61.4% (down 0.1ppt MoM), as a large number of working-age individuals left the job-seeking market. The employment-to-population ratio slipped to 58.9%—the combination of a low unemployment rate and negative payrolls reflects a "fragile equilibrium" in the labour market, not strength.
(3) CME FedWatch: The probability of a 25bp rate hike in September plunged from around 54% before the payrolls data to approximately 22%, while the odds of no change jumped to about 78%. The US dollar index tumbled during the Friday night session, the 10-year Treasury yield slid rapidly, and COMEX gold surged 2.32% in a single day to a new year-to-date high—the "return of the easing trade" was the core catalyst for the collective rally in base metals during the night session and the Asian session on August 10, with tin showing the greatest elasticity on its low-inventory theme.
(4) But hawkish voices have not fully retreated: Kashkari’s "three hikes this year are not impossible" and Cook’s "ready to hike if inflation does not cool" are still present. Moreover, the payrolls weakness partly stems from structural factors such as government education (-50,000), retail trade (-19,000), and financial activities (-14,000), which may not persistently subtract going forward. The August 12 CPI will be the next key period for verifying whether inflation is truly cooling.

Fundamentals: Yinman remains fully suspended, and Wa State is capped at 50% utilisation—supply elasticity remains firmly stuck at a low level.
(1) Yinman Mining's mining & beneficiation and tailings systems are fully shut down, with the shutdown duration still uncertain. Xingye Silver&Tin announced on July 30 that both the mining system and the beneficiation/tailings system have been halted, and the surface stockpile buffer of 350,000 mt of ore has become ineffective. The core tin-silver mine, with a mining and beneficiation capacity of 1.65 million mt/yr, is estimated to lose about 1,000 mt of tin metal based on a short halt of 1–2 months (accounting for about 3%–4% of domestic tin concentrate supply, representing a regional marginal tightening rather than a nationwide supply disruption).
(2) Wa State's rainy season is at its tail end, still "capped at 50%": the rainy season is winding down in August, with mine drainage and transport slightly improving, but the full-year production resumption ceiling is locked at 40%–50% of the pre-ban level, and full resumption is delayed to 2027.
(3) Smelting and demand: In June, domestic refined tin production was 15,430 mt (+1.71% MoM, +11.73% YoY). Yunnan's refined tin operating rate was around 80%, while Jiangxi's remained low at 32%–35%. TC for 40% tin concentrates stood at about 17,500–18,000 yuan/mt, still at a low level—tight ore → weak smelting → limited ingot growth, with the transmission chain unbroken.

 Spot Market 
Trading: high-level paralysis persists. Above 435,000 yuan, solder plants barely place orders. Transactions are concentrated in the 430,000–433,000 range, driven by midstream circulation and sporadic rigid demand.

[Data source statement: Data other than public information are processed by SMM based on public information, market communication, and SMM's internal database models, and are for reference only, not constituting decision-making advice. The information provided is for reference only. This document does not constitute direct investment research or decision-making advice. Clients should make cautious decisions and not substitute their own independent judgment. Any decision made by clients has nothing to do with Shanghai Metals Market.]