SMM Morning Review - 2011/8/17 Tin Market

SHANGHAI, Aug. 17 (SMM) -- LME tin for delivery in three months opened at USD 24,600/mt and closed at USD 23,900/mt overnight, down by USD 475/mt from a day earlier, with the highest price at USD 24,650/mt and the lowest price at USD 23,825/mt. Daily trading volumes were 566 lots, up by 343 lots. Positions were 20,146 lots, down by 701 lots from a day earlier. LME tin inventories were down by 15 mt to 22,880 mt.

LME tin prices advanced slightly during the Asian trading hours, but plunged at the tail of the Asian trading hours. During the evening trading hours, LME tin prices failed to pare early losses, and fluctuated narrowly around USD 24,000/mt, with prices finally closing at USD 23,900/mt, down by USD 475/mt from day earlier. Economic data released on Tuesday were mixed. The weak economic growth released by Germany triggered investors concern over global economy. Although July’s housing starts from the US were better than expectation, the data were below healthy level. In this context, market responded insensitively towards the data.

Initial GDP for 2Q from the euro zone was up by 0.2% QoQ, and up by 1.7% YoY. Seasonally adjusted GDP growth for 2Q from Germany fell to 0.1%, while revised GDP growth for 1Q from Germany was up by 1.3%.

The US industrial production for July was up by 0.9% MoM, while previous estimation was up by 0.5%. The US housing start for July was down by 1.5%, with an annualized rate of 604,000 units, higher than previous estimation of 600,000 units. Although the data were better than expectation, the US building industry is still below healthy level. Economists believe that housing starts should be around 1.5 million units. In addition, July’s building permits was down by 3.2%, with an annualized rate of 597,000 units, lower than previous estimation of 605,000 units.

Fitch confirmed the US’s AAA credit rating, and put the US’s credit outlook into stable. 

Impact from Indonesia's tin supply restriction has been absorbed, and LME tin prices fell in response. Market closely watches negotiations between Germany and France concerning the European debt crisis, and market sentiment will be weighed before final outcome of the negotiation. SMM expects LME tin prices will struggle around USD 24,000/mt on Wednesday. In the Shanghai tin spot market, tight supply will continue to support spot tin prices, but decline in LME tin prices may falter cargo-holders’ confidence. SMM expects that spot tin prices will move in the RMB 196,500-198,000/mt range on Wednesday.