SMM Morning Review - 2010/2/9 Tin Market

SHANGHAI, Feb. 9 (SMM) --

LME tin market opened at USD 31,176/mt and closed at USD 31,400/mt  on Febuary 8th, up by USD 200/mt from a day earlier, with the highest price at USD 31,650/mt and the lowest price at USD 31,025/mt. Daily trading volumes were 362 lots and positions were 22,037 lots. LME nickel inventories were down by 15 mt to 18,760 mt. Cancelled warrants were 1,860mt, accounting for 9.91% of total inventories.

LME tin prices extended upward momentum during the Chinese New Year holiday, and were up by total USD 1,250/mt or up by 4.1% from the level on February 1st. The US dollar index began to rebound slightly and closed at 77.993 on Wednesday, fluctuating narrowly around 78.

LME base metal prices mostly ended with gains on Tuesday, but trading sentiment was cautious as China’s central bank raised benchmark interest for the first time after Chinese New Year holiday. However unrest ceased and trading sentiment stabilized to certain extent after the news was absorbed. LME tin prices slipped due to impact from interest rate hike, but later reserved decline trend. Supply concern from Indonesia continuously lent support for tin prices. 

China’s central bank raised benchmark interest rate hike for the first time after Chinese New Year holiday, also the second time of its kind in six months. China is strengthening efforts to curb inflation, which is expected to curb demand for raw material. Many market insiders don’t believe that interest rate hike will exert negative impact on commodity prices in the long term, as such interest rate adjustment will to significantly dampen upward momentum in economic growth.

Market shall closely watch China’s CPI to be released next week, which may trigger more stern measures from China. Asian market will resume transaction after the Chinese New Year holiday, and interest rate hike from China may dampen upward momentum in the market in the short term and may curb base metal prices from soaring. Oversupply and continuous expanding of NPI will be the major factors dragging down nickel prices. SMM expects that LME tin prices will receive support at USD 31,000/mt and will continue to test USD 31,500/mt on February 9th.

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