SMM Morning Review – 2011/10/10 Tin Market

SHANGHAI, Oct. 10 (SMM) -- LME tin prices opened at USD 22,500/mt and closed at USD 22,900/mt last Friday, up USD 502/mt from a day earlier, with the highest price at USD 23,099/mt and the lowest price at USD 22,301/mt. Daily trading volumes were 331 lots, up 15 lots. Positions were 18,192 lots, up 284 lots. LME tin inventories were 21,350 mt, up 185 mt from a day earlier.

Last Friday’s non-farm employment data from the US were better than market expectation, easing market concern over slowdown of the US economic growth. LME tin prices advanced all the way, but met resistance at USD 23,000/mt. During the European trading hours, LME tin prices largely fluctuated below USD 23,000/mt, hitting a high of USD 23,099/mt, and finally closed at USD 22,900/mt, up USD 502/mt from a day earlier. LME tin prices presented positive performance during China’s National Day holiday, advancing for five consecutive days by 13.3% and returning above 30-day moving average.

On Oct. 7th, Fitch Ratings downgraded its long-term IDR rating on Italy from 'AA-' to 'A+', outlook negative, and short-term rating lowered from 'F1+' to 'F1'. The downgrade reflects the intensification of the Euro zone crisis that constitutes a significant financial and economic shock which has weakened Italy's sovereign risk profile.

The rating agency Moody's on Friday cut ratings of 12 British banks, raising investors' concerns about the health of European banks. Meanwhile, Moody’s also downgraded independent rating of 6 Portuguese banks, which was mainly due to deteriorating assets and increasing sovereign bond risks and tight liquidity of these banks.

The US department of Labor announced on Friday the non-farm payroll report for September showed that 103,000 jobs were added, which were better than expected. Non-farm payroll for August and July was also revised upward. The US unemployment rate remained at 9.1% for three consecutive months. The better-than-expected data boosted market sentiment, but Fitch Ratings’ downgrade adjustment of Spanish bond rating re-fueled market concern over the European debt crisis and capped price growth of base metals.

LME tin prices presented relatively positive performance during China's National Day holiday. However, the overall macroeconomic condition is still weak, as the European debt crisis remains unsettled and no significant improvement is made for the US economic outlook. It is expected that LME tin prices will continue to fluctuate on Monday, with resistance at USD 23,000/mt. In domestic tin spot market, LME tin price increase will boost spot nickel prices, and SMM expects that spot tin prices will move in the RMB 182,000-184,000/mt range on Monday.