SMM Morning Review – 2011/9/23 Tin Market

SHANGHAI, Sept. 23 (SMM) -- LME tin prices opened at USD 21,701/mt and closed at USD 19,600/mt overnight, down USD 2,400/mt from a day earlier, with the highest price at USD 21,701/mt and the lowest price at USD 19,600/mt. Daily trading volumes were 1,325 lots, up 704 lots. Positions were 17,385 lots, down 243 lots. LME tin inventories were 21,165 mt, up 5 mt from a day earlier.

LME tin market witnessed panic sell-offs overnight, with LME tin prices down by USD 2,400/mt, or down 10.91% from a day earlier. Sluggish PMI from euro zone and China triggered concern that global economy may experience double-dip recession, resulting in sell-offs in base metal market. LME tin prices closed at USD 19,600/mt, the lowest since August 2010.

On Thursday, September’s PMI announced from China and euro zone slipped, and Germany’s PMI was below 50 mark. In addition, factory orders for July contracted sharply in the euro zone, and initial consumer confidence index for September also fell sharply. IMF restarted emergency relief. Sluggish economic data fueled market concern that global economy may slip into another recession, triggering slumps in global financial market. The US dollar further advanced from risk aversion sentiment, and the euro plummeted. Equity markets in Europe and the US fell sharply, with Dow Jones Industrial Average falling below 11,000 mark, down 3.51%. Gold and crude oil also tumbled. LME base metals plunged, with LME tin and LME nickel both down by more than 10%.

No stimulus policy was released at Federal Reserve meeting. In addition, credit raging agencies further weighed on euro zone due to unsolved debt issue in the euro zone. Moreover, China’s CPI was at high level and capital was tight at enterprises, and HSBC’s China PMI has been blow 50 for three consecutive months. Meanwhile, various countries lack substantially supportive policy for economic growth, and market sentiment towards global economic outlook was pessimistic.

LME tin prices opened at USD 20,000/mt on Friday. A technical rebound is possible for LME tin prices after slumping overnight, but LME tin price may fall further on Friday considering pessimistic economic environment, with support at RMB 190,000/mt. In domestic tin spot market, overnight LME tin price plummet will inevitably drag down spot tin prices, and SMM expects that spot tin prices will move in the RMB 185,000-190,000/mt range on Friday.