SMM Morning Review – 2011/12/7 Tin Market

SHANGHAI, Dec.7 (SMM) -- LME tin prices opened at USD 20,000/mt and closed at USD 20,010/mt overnight, down USD 90/mt from a day earlier, with the highest price at USD 20,475/mt and the lowest price at USD 19,850/mt. Daily trading volumes were 547 lots, up 13 lots. Positions were 16,161 lots, up 284 lots. LME tin inventories were 12,395 mt, up 230 from a day earlier.

The Reserve Bank of Australia (RBA) announced on Tuesday to lower the cash rate from 4.5 percent to 4.25 percent, effective Dec. 7, which was in line with market expectation, a reflection of tight liquidity in the market. In addition, no progress was reported for the European debt crisis. Standard and Poor’s put EFSF 3A credit rating on negative watch. It was also reported that the euro zone was discussing to expand rescue fund scale, and might lift or cancel the EUR 500 billion rescue limit. LME base metal prices closed mixed overnight, as market lacked direction amid cautious sentiment before release of EU interest rate result and China’s CPI data.

LME tin were weighed to move around USD 20,000/mt during the Asian trading hours and early European trading hours, due to warning from the Standard and Poor’s that it might cut bank credit rating of 15 euro zone members. However, during the evening trading horus, Germany’s orders in manufacture sectors in October were up 5.2%, far higher than market expectation, boosting market sentiment. In response, LME tin prices advanced slightly to move above USD 20,000/mt. Finally, LME tin prices closed at USD 20,010/mt, down USD 90/mt from a day earlier. 

It is expected that market sentiment will remain cautious as the EU interest rate meeting will be held this Friday and since China will release it CPI soon. Therefore, SMM expects that LME tin prices will fluctuate around USD 20,000/mt on Wednesday. In China’s domestic spot tin market, spot tin prices will unlikely reverse downward momentum, and will move in the RMB 162,000-167,500/mt on Wednesday.