PCE Slightly Exceeds Expectations, September Rate Hike Probability Rises to 42% SHFE Tin 2610 Contract Consolidates Around 420,000 [SMM Tin Morning Brief]

Futures

LME: LME three-month tin closed at $55,100/mt in electronic trading on Aug 26, down $685, or 1.23%, opening at $55,815, high of $55,885, low of $55,475. After the PCE data release, the US dollar index surged (up 0.29% to 99.19), with precious metals and base metals broadly under pressure, and tin on the London market followed and pulled back. LME tin inventory on Aug 26 decreased by 35 mt to 5,120 mt (another data source showed 5,155 mt, down 75 mt), continuing to hit new phase lows, with a cancelled warrant ratio of 12.61%—the “squeeze backdrop” of low inventory and high cancellations remined intact, but macro headwinds dominated in the near term.

China: The most-traded2610 contract in the night session closed at 419,410 yuan/mt, down 6,680 yuan, or 1.57% (Jintouwang, 1:00 am data), opened at 424,090, high of 424,350, low of 417,750. At 09:02: the 2610 contract traded at 419,720 yuan/mt, down 6,370 yuan, or 1.49%, opened at 424,090, low of 417,750, high of 424,350, average price 420,941, open interest 44,892 lots; the SHFE tin most-traded contract also traded at 419,720, down 1.49%—the 420,000 level shifted from “long-term support” to “immediate battleground,” with the night session low of 417,750 as the first short-term defense line.

Inentory in three dimensions:

• LME tin inventory at about 5,120 mt (Aug 26, -35 mt), continuing to hit new phase lows, with a cancelled warrant ratio of 12.61%—hard destocking outside China persisted;
• SHFE tin warrants at about 5,340 mt (down 112 mt MoM), warrants slightly destocked;

Macro: PCE slightly exceeded expectations, with the probability of a September rate hike rising from 36% to 42%, and focus shifted to Washi’s Jackson Hole debut on Friday

(1) July PCE data released: inflation stickiness exceeded expectations. At 20:30 Beijing time on Aug 26, the US Bureau of Economic Analysis reported: July PCE YoY3.7% (expected 3.6%, prior 3.7%), MoM+0.2% (expected +0.1%, prior -0.1%); core PCE YoY3.3% (in line, prior 3.3%), MoM+0.2% (in line, prior +0.1%). Headline PCE came in slightly above expectations + core PCE accelerated MoM, indicating a lack of further progress in the disinflation trend; annualized inflation has remained materially above the US Fed’s 2% target for 65 consecutive months.

(2) The probability of a September rate hike rose from 36% to 42%.After the data release, interest-rate futures showed: the probability of a 25 bp hike in September rose from about 36% pre-release to about 42%; however, CME 8/27 data showed the probability of no change in September still stood at 63.5%, and the probability of a 25 bp hike at 36.5%—“no move” remained the base case, but hawkish forces strengthened at the margin. Boston Fed President Collins stated clearly: “If evidence of continued declines in inflation does not emerge, I think monetary policy should be tightened as soon as possible”; the July discount-rate minutes disclosed that Logan, Hammack, and Kashkari, among three others, advocated a 25 bp hike but were voted down—internal divisions within the US Fed surfaced ahead of the September meeting.

(3) Countdown: 48 hours to Warsh’s Jackson Hole debut.On 8/28 (Friday) at 10:00 a.m. ET, he will deliver the keynote speech, only 19 days before the 9/15–16 FOMC. Market focus has shifted from “whether rates will be hiked in September” to “how Warsh will explain the current sticky inflation and what kind of data would prompt the US Fed to restart rate hikes.” Multiple analysts agreed that since taking office, Warsh has shortened statements, canceled the dot plot, and reduced forward guidance; expectations were that this time he will not release a clear rate signal, but former St. Louis Fed President Bullard warned that “the US Fed’s credibility is at risk”—the 20-minute speech is the “decisive sentence” before September.

(4) Nvidia earnings window: After the close on 8/26, Nvidia released its FY2027 Q2 results; the CFO expected FY2028 revenue to grow by about 70%. A strong earnings outlook drove the stock from down to up—AI capex beating expectations provided sentiment-repair momentum for tin “solder alpha”, the only positive variable in today’s futures resisting macro headwinds.

(5) Long-end US Treasury undercurrent: The 30-year yield held above 5.25%, and Bessent’s long-bond buyback “fever reducer” had limited effect—elevated long-term rates are the practical constraint on Warsh’s hawkish stance and the underlying reason tin’s “easing trade” failed to materialize.

Fundamentals: End of Wa rainy season + Indonesia export controls, hard supply constraints remain unrelaxed

(1) Myanmar’s Wa State was still in the late rainy season, mining and logistics remained constrained, and tin concentrates import volumes did not see a material increase; tin concentrates imports stood at 16,958 mt in July, down 2.8% MoM and up 56% YoY, of which Myanmar-origin tin concentrates totaled 4,570 mt (down 27% MoM, up 157% YoY)—— the 27% MoM decline in Myanmar ore reflects the impact of the Wa mining ban, while the high YoY surge was merely a low base effect.

(2) Indonesia export controls: July refined tin exports were 4,564.53 mt, up 20.4% YoY; Indonesia’s Timah has completed its annual inspection, and August exports may recover, but the low annual quota and the pace of windfall tax policy advancement still create uncertainty—— the price support from supply disruptions has weakened, but the export recovery remains limited.

(3) Domestic smelting sector: refined tin smelter operating rates remained steady, purchased ore smelting margins were under pressure, secondary tin was constrained by scrap supply, with limited growth; Yunnan 40% tin concentrates TC was around 17,900 yuan/mt, Guangxi 60% TC at 14,650 yuan/mt, ore supply tightness has eased from earlier levels but remains tight.

Spot market

transactions: “Hard supply constraints provide a floor, near-term off-season demand is weak, macro sentiment swings back and forth, the futures lack directional drivers and consolidate in a range”—— 425,000–428,000 yuan/mt was the mainstream quotation range in the spot market, with virtually no trading above 430,000 yuan/mt; the 418,000–423,000 yuan/mt range was where downstream was willing to settle on a backward pricing basis.

[Data Source Statement: All data except publicly available information are processed by SMM based on public information, market communication, and SMM's internal database models, for reference only and do not constitute decision-making advice. The information provided is for reference only. This article does not constitute direct investment research or decision advice. Clients should make decisions prudently and not use this as a substitute for independent judgment. Any decisions made by clients are not related to Shanghai Metals Market]