Market concerns over economic weakness led to tin prices following the sector in the doldrums [Institutional Commentary]

【Market Review】

1. Futures Market: The SHFE tin 2505 contract closed down 14,930 yuan/mt MoM to 254,100 yuan/mt. Open interest for SHFE tin increased by 3,354 lots to 77,268 lots.

2. Spot Market: Disturbances in raw materials persist. Affected by macro sentiment, SHFE tin fell sharply again, with smelters holding back cargoes. Traders showed a moderate willingness to sell, reporting that some downstream buyers placed inquiries and orders at low prices, mainly for essential needs. Morning transactions were moderate.

【Related News】

1. According to Bloomberg, US officials stated that additional 50% tariffs on Chinese products will take effect at 12:01 AM Eastern Time on April 9 (12:01 PM Beijing Time on April 9). Previously, after the US imposed 34% reciprocal tariffs on China, China retaliated by imposing 34% tariffs on all US imports. Trump announced early on April 8 Beijing Time that if China did not revoke the new 34% tariffs by April 8, an additional 50% would be imposed, potentially raising total tariffs to 104%. China firmly opposes this, reiterating that "if the US persists, China will respond in kind."

2. On April 9, China released a white paper on its stance on China-US economic and trade relations, emphasizing the need to respect each other's core interests and major concerns and to find solutions through dialogue and consultation.

3. Earlier on Tuesday, according to CCTV News, US Trade Representative Greer stated that "reciprocal tariffs" will take effect on April 9. Trump's negotiations with other countries on tariffs have no specific timetable. Trump has made it clear that tariff exemptions will not be implemented in the near term. Market interpretation: Dalio warned investors that we are experiencing a "once-in-a-lifetime" systemic collapse of global monetary, political, and geopolitical orders. The five fundamental forces driving this transformation are the collapse of the monetary order, political turmoil, the reshaping of the geopolitical order, technological change, and natural disasters.

4. Indonesia's Minister of Mining stated that Indonesia plans to impose mining royalties in the second week of April. The Ministry of Energy and Mineral Resources will soon issue a ministerial decree listing new royalty rates, increasing royalties for various minerals and coal mining commodities. Previously, on March 8, the Ministry of Energy and Mineral Resources released a public consultation on "Adjustments to the Types and Rates of Non-Tax State Revenues in the Energy and Mineral Resources Sector," indicating that it is considering raising mining taxes for various minerals from copper, tin, nickel to coal. For tin, the previous single royalty rate of 3% may now be adjusted to a progressive rate (3%-10%) based on market prices.

5. The pre-resumption meeting for the Wa State, originally scheduled for April 1, was canceled. The Wa State Industrial and Mineral Resources Administration issued a notice on March 26, 2025, scheduling a pre-resumption meeting for the Mansiang mine at 8:00 AM Myanmar Time on April 1 at the Mansiang office. However, a 7.9-magnitude earthquake struck Myanmar on March 28, 2025, prompting the Wa State Industrial and Mineral Resources Administration to issue a notice on March 31, 2025, postponing the Mansiang mine resumption meeting. Galaxy Interpretation: The Myanmar earthquake has raised market concerns about tin ore transportation and the progress of subsequent resumption efforts.

【Logical Analysis】

The supply gap in tin fundamentals remains, with no news of resumption in the DRC. After the cancellation of the resumption meeting in Myanmar, its annual supply may not see significant increases. Indonesia's policy of shifting from a single royalty rate to a progressive rate (significantly higher) for tin exports may soon be implemented. Subsequent attention will focus on the final policy, as the increase in royalties may significantly impact local companies' mining costs, potentially tightening the tin supply-demand situation. However, despite strong supply-demand imbalances in fundamentals, tin prices are more significantly affected by macro factors. After the US imposed reciprocal tariffs, market concerns about a subsequent global economic slowdown led to a sharp decline in non-ferrous metals, which have since remained in the doldrums. Overseas macro markets, driven by uncertainty about future global demand, have fueled panic sentiment, with bearish funds entering the market and driving tin prices to move weakly in line with the sector. Yesterday, LME tin spot premiums fell sharply. Subsequent attention will focus on whether the market returns to fundamental logic after the panic sentiment subsides.

【Trading Strategy】

1. Unilateral: Before the panic sentiment over concerns of economic weakness is digested, tin prices are expected to remain in the doldrums in line with the sector. Caution is advised. 2. Options: Temporarily on hold.

(Source: Galaxy Futures)