SMM Morning Review – 2011/9/30 Tin Market

SHANGHAI, Sept. 30 (SMM) -- LME tin prices opened at USD 20,000/mt and closed at USD 20,900/mt overnight, up USD 400/mt from a day earlier, with the highest price at USD 21,400/mt and the lowest price at USD 19,601/mt. Daily trading volumes were 208 lots, down 112 lots. Positions were 18,366 lots, down 367 lots. LME tin inventories were 21,165 mt, down 285 mt from a day earlier.

Germany's parliament approved new powers for the euro zone crisis fund by a large majority. In addition, better-than-expected economic data from the US eased market concern over economic recession. Market sentiment improved, but macroeconomic uncertainties still remain. LME tin prices fluctuated wider overnight, hitting a high of USD 21,400/mt. Finally, LME tin prices closed at USD 20,900/mt, up USD 400/mt from a day earlier.

On Thursday, market sentiment was boosted, as Germany’s lower house of parliament passed proposal for expansion of euro zone rescue fund and since economic data from the US were positive. However, Fitch’s unexpectedly cut credit rating of New Zealand, casting a shadow over market outlook. The euro advanced, while the US dollar was weighed down. Equity markets in Europe and the US largely closed with gains, and prices of gold and crude oil fluctuated higher. LME base metal prices also rallied across the board. Although market sentiment eased to certain extent, market trend remained unclear. It is expected domestic market sentiment will be cautious during the last pre-holiday trading day and ahead of the released of HSBC’s final China PMI on September 30th and release of China’s official PMI on October 1st.

It is expected that LME tin prices will rebound from eased market sentiment, but growth will be capped by lingering European debt crisis. SMM expects that LME tin prices will target USD 210,000/mt on Friday. In China’s domestic tin spot market, limited supply and soft demand will weigh on spot tin prices, despite of overnight LME tin price rally. SMM expects that spot tin price will move in the RMB 180,000-183,000/mt range on Friday.