LME Tin Price Spiked Over 4% After Stocks Hit One-Month Low, Shoring Up SHFE Tin Price, But Poor Domestic Fundamentals Mean Such Price Gains Are Unsustainable

Boosted by LME tin stocks hitting one-month low last Friday, LME tin prices once rose more than 4% yesterday, climbing to a new high since September 28, 2023 at $25,845/mt.

This also lifted SHFE tin prices to a new high since November 17 at 214,650 yuan/mt.

Softening US dollar and positive Chinese economic data both contributed to price spike.

On December 27, the National Bureau of Statistics released data showing that profits of industrial enterprises above designated size increased by 29.5% year-on-year in November. The growth rate was significantly faster than that in October. Profits have achieved positive growth for four consecutive months.

USD: The US dollar index kept dipping since late December, and was volatile on December 28, rising 0.01% as of 15:01. According to the Chicago Mercantile Exchange's (CME) FedWatch tool, currently traders saw about an 80% chance of the Fed’s interest rate cut, and the rate may drop by as deep as 153 basis points next year.

Spot prices

The average spot price of SMM 1# tin was 214,000 yuan/mt on December 27, up 5,000 yuan/mt or 2.39% from previous day.

SMM estimated that domestic tin ingot production in December will be 15,445 mt, down 0.74% MoM but up 2.69% YoY.

Import: Customs data showed that domestic tin ore imports in November were 27,800 mt, up 10.17% MoM and 4.97% YoY, although insufficient ROM inventory led to shutdown of about 80% of beneficiation plants in Myanmar's Wa State at the end of November. The authorities in Wa State didn’t made it clear when the beneficiation plants will resume production, and the shutdown is more likely to linger before next February. It is expected that tin ore imports from Myanmar may not mount aggressively in a future. Meanwhile, imports from other foreign countries other than Myanmar in November dropped to a certain extent, and are unlikely to see a large hike in the future.

Meanwhile, domestic tin ingot imports in November were 5,346 mt, up 60.93% MoM and 3.32% YoY. Boosted by sustained profit hike, domestic tin ingot imports shot up, and may remain high.

Since December this year, social inventory of domestic tin ingots in different regions decreased first and then piled up, seeing a rise by 385 mt Wow on December 22. LME tin stocks kept dropping last week, and were 7,755 mt on December 22, down 355 mt WoW, hitting a one-month low.

Recently, the SMM survey shows that electronics consumption in South China remained sluggish, with a slight drop in orders from downstream companies and terminal sectors.

Forecast

Overall, given ample supply and muted demand, SMM expected that current domestic tin price rise is unlikely to sustain. Macro news and impact of LME tin price on SHFE tin price will deserve to be monitored.