Tin Prices Rallied Quickly amid Supply Tightness, Eyes on Future Inventory Changes

SHANGHAI, Jun 27 (SMM) – SHFE tin prices rallied strongly today after recording a slump of 9.49% last Friday June 24, and once gained 1.21%. LME tin also dropped greatly by 5.36% last Friday, and once surged 5.14% today. As of 13:53 Beijing time, SHFE and LME tin dropped 0.21% and grew 3.54% respectively.

Spot market:

SMM 1# tin spot price fell for the fourth consecutive day today, down 8% in four working days and down 1.14% today to 216,500 yuan/mt.

The smelters were more firm to the prices in morning trade, but the spot premiums were largely unchanged from last week despite rising tin prices. Market shipments were low, and some traders failed to clinch a deal as of close of morning trade. The downstream, on the other hand, purchased on rigid demand, and strongly rebounding tin prices have aggravated the wait-and-see sentiment of buyers.

According to SMM analysis, the on-going maintenance kept pulling down the operating rates in Yunnan and Jiangxi, which are expected to remain low in the near term. Imports from Myanmar dropped significantly MoM in May due to disturbances from the pandemic, while the import window opened again as LME tin outperformed the SHFE contract.

On the demand side, the downstream still purchased on demand, and steeply falling tin prices failed to stimulate the buying interest. The social inventory dropped as expected amid on-going maintenance of smelters. The shorts were relatively aggressive when tin prices dropped significantly last week.

However, the social inventory only dropped slightly, which failed to offer strong support to tin prices. As of last Friday, SHFE tin inventory stood at 3,726 mt, while LME tin inventory recorded 3,435 mt.

With the extension of smelter maintenance, short-term supply is expected to remain tight. Spot premiums have shown signs of rising, and tin prices are likely to rebound strongly if the inventory keeps falling in the future.