SMM Morning Review – 2011/11/1 Tin Market

SHANGHAI, Nov. 1 (SMM)—LME tin market overnight opened at USD 22,100/mt, with the highest and lowest level of USD 22,150/mt and USD 21,860/mt, respectively. Finally, LME tin market closed at USD 22,000/mt, down USD 50/mt from a day earlier. Trading volumes were 125 lots, up by 8 lots. Positions were 16,110 lots, down by 361 lots. Inventories were 16,445 mt, down by 105 mt.

LME tin market overnight moved lower during Asian trading hours along with the rising US dollar after the Bank of Japan took action to slow the rise of the yen. During European trading hours, LME tin prices moved between USD 21,900-22,000/mt, as market optimism was overshadowed by the opinion that European economic issues remain unresolved. Finally, LME tin prices ended at USD 22,000/mt, down USD 50/mt from a day earlier.

On Monday, the US dollar index surged after the Bank of Japan intervened to slow the rise of yen against the dollar, sending stock markets in the US and Europe and commodity markets down sharply. Besides, the disappointing Belgium's auction results dented markets, while the yield of Italy’s bonds reached the level before ECB intervention began in August. All these reignited market fears over the Italian risks may threaten the Euro zone. Those negative factors weighed down base metal prices.

China will announce the PMI data for October on Tuesday. Markets expected the data to rise, which will help ease market concerns over the slowing of Chinese economic growth. The PMI for October to be released by China Federation of Logistics & Purchasing (CFLP) will likely rise to 51.7 from September’s 51.2 based on a survey of Dow Jones. If the result is within market expectations, it will mark the third consecutive monthly growth of the data, suggesting that Chinese economy is in good shape. The China PMI data announced by HSBC last week for October rose to 51.1, a sign of expansion.

Due to the lingering concerns over the European debt crisis, LME tin prices are expected to keep fluctuating, with prices expected to move around USD 22,000/mt. particular attention should be paid to the data to be released by China and US. In the domestic tin market, prices will move between RMB 181,000-183,000/mt on Tuesday.