SMM Morning Review - 2011/5/5 Tin Market

SHANGHAI, May. 5 (SMM) -- LME tin for delivery in three months opened at USD 32,100/mt and closed at USD 31,000/mt overnight, down by USD 1,251/mt from a day earlier, with the highest price at USD 32,100/mt and the lowest price at USD 30,900/mt. Daily trading volumes were 407 lots, up by 42 lots, Positions were 21,205 lots, down by 30 lots from a day earlier. LME tin inventories were up by 285 mt to 21,080 mt.                                                      

LME base metal prices largely plunged on Wednesday, due to demand concern and from weaker-than-expected US economic data. LME tin prices largely moved stably during the Asian trading hours, but plunged by 3.9% to a 1.5-month low from downbeat US economic data during the European trading hours.

The Institute for Supply Management's index of non-manufacturing activity last month came in below expectations, weighing on base metal prices due to investors' concern over metal demand outlook. Coupled with possibly further tightening monetary policy from China and concern over possible slower growth of Chinese economy, investors' confidence was further dampened.

The Institute for Supply Management (ISM) announced on Wednesday, the US non-manufacturing activity index in April was 52.8, the lowest since August 2010, and lower than expectation of 57.0. Payroll giant Automatic Data Processing also cast gloom, reporting that private-sector jobs in the U.S. rose 179,000 in April when a gain of 200,000 had been expected. 

The decline in rude oil inventories announced by the US send crude oil futures price lower and weighed on base metal prices as well.

Investors concerned that China may further tighten its monetary policy. In addition, the slower growth of the US economy and rising energy costs will curb economy growth and dent base metals demand. Negative factors dominated market, and prices face risks to fall further. SMM expects that LME tin prices may hard to reverse downward trend, and recently steady growth in LME tin inventories will exert pressure on tin prices, thus LME tin prices may dip further to test support at USD 31,000/mt. Domestic tin prices will also soft to certain extent.

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