SMM Morning Review – 2011/10/11 Tin Market

SHANGHAI, Oct. 11 (SMM) -- LME tin prices opened at USD 23,000/mt and closed at USD 23,150/mt overnight, up USD 250/mt from a day earlier, with the highest price at USD 23,200/mt and the lowest price at USD 22,800/mt. Daily trading volumes were 188 lots, down 143 lots. Positions were 18,218 lots, up 26 lots. LME tin inventories were 19,795 mt, down 495 mt from a day earlier.

LME tin prices fluctuated higher overnight, as base metal market was strongly boosted following the announcement that Germany and France were close to a final deal to shore up European banks. LME tin prices broke through resistance level of USD 23,000/mt during the European trading hours, and hit a high of USD 23,200/mt. Finally, LME tin prices closed at USD 23,150/mt, up USD 250/mt from a day earlier.

German Chancellor Angela Merkel and French President Nicolas Sarkozy announced on October 10th that there was an agreement to strengthen European banks to prevent expansion of European sovereign debt crisis. Germany and France had given themselves three weeks to devise a plan to recapitalize banks and find a "durable" solution for Greece's debt load. In addition, manufacture and industrial productivity data announced from Germany and France were far better than market expectation, easing market concern and supporting the euro. In response, the euro rallied and the US dollar fell sharply. With the US three major equity indexes advancing, base metal prices also rallied across the board overnight.

Central Huijin Investment Ltd, an arm of China's sovereign wealth fund, bought shares in four major Chinese State-owned banks on the secondary market on Monday. The four banks include the Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China (ABC), Bank of China (BOC) and China Construction Bank (CCB), according to the company. Bank share purchase by Central Huijin Investment will stabilize domestic financial market and will boost market confidence to certain extent in the short term.

LME tin prices broke through resistance level of USD 23,000/mt overnight on Europe hopes and bank share purchase by Central Huijin Investment. SMM expect that LME tin prices will consolidate at USD 23,000/mt and may advance further on Tuesday. In China’s domestic tin spot market, overnight LME tin price increase will lend support for spot tin prices, and SMM expects that spot tin prices will move in the RMB 184,000-186,500/mt range on Tuesday.