Uncertainty in Overseas Supply Persists; Medium and Long-Term Monitoring of Myanmar Mine Policies Needed [SMM Tin Market Brief]

Daily Review of the Most-Traded SHFE Tin Futures Contract on February 18, 2025

I. Market Review

On February 18, 2025, the most-traded SHFE tin futures contract (SN2503) exhibited a jump initially and then pull back trend. The opening price was 262,500 yuan/mt, with an intraday high of 266,250 yuan/mt. However, it faced resistance and pulled back, reaching a low of 263,900 yuan/mt, and eventually closed at 261,060 yuan/mt, basically flat compared to the previous trading day's settlement price.

II. Fundamental Analysis

1. Tight Supply Side: Myanmar's Wa State mining ban continues, keeping tin ore import volume at low levels. Additionally, domestic smelters are under significant production pressure due to rising environmental protection costs and declining resource grades. Indonesia's tin ore exports remain subdued, while the Alphamin mine in the DRC faces potential threats from ongoing conflicts, adding uncertainty to overseas supply.

   Accumulation of Domestic Inventory: Tin inventory at the Shanghai Futures Exchange increased to 6,305 mt, up by 158 mt from the previous trading day, with a notable rise in Shanghai region inventory (+94 mt), indicating heightened short-term supply pressure. Slight Rebound in Overseas Inventories: LME tin inventory rose to 3,930 mt, but LME tin prices gained 0.44% to around $32,900/mt, supported by a weaker US dollar. Divergence was observed between inventory and price trends in domestic and overseas markets.
2. US Dollar Index Decline: Weak January retail data in the US led to a drop in the US dollar index to 106.64, providing short-term support for the base metals sector.
3. Policy Expectation Dynamics: US Fed Governor Bowman emphasized the need for more evidence of declining inflation before cutting interest rates. The market remains cautious about the March FOMC meeting, suppressing risk appetite.
4. Technical Patterns: On the daily chart, prices jumped initially and then pulled back, with significant resistance at 265,000 yuan/mt. The MACD indicator showed shortening red bars, indicating weakening upward momentum.
5. Changes in Open Interest: Open interest in the most-traded contract decreased by 1,311 lots to 28,800 lots.

In the short term, SHFE tin is expected to maintain a high-level oscillation pattern, with mixed bullish and bearish factors. It is recommended to monitor the breakthrough of the key resistance level at 265,000 yuan/mt. If prices face resistance and pull back, caution is advised for a potential retreat to the 255,000-260,000 yuan/mt range. In the medium and long-term, attention should be paid to Myanmar's mining policies and the resumption progress of domestic smelters.