SMM Morning Review - 2012/1/12 Tin Market

SHANGHAI, Jan. 12 (SMM) -- LME tin for delivery in three months opened at USD 20,275/mt and closed at USD 20,425/mt overnight, up by USD 270/mt from a day earlier, with the highest price at USD 20,500/mt and the lowest price at USD 20,150/mt. Daily trading volumes were 321 lots, down 23 lots. Positions were 15,954 lots, down by 42 lots from a day earlier. LME tin inventories were down by 20 mt to 11,250 mt.

LME tin prices advanced to hit a high of USD 20,400/mt during the Asian trading hours and early European trading hours. However, due to renewed concern over the European debt crisis, the euro weakened, weighing down LME tin prices to around USD 20,200/mt. At the tail of the trading, LME tin prices rallied again to hit USD 20,500/mt and finally closed at USD 20,425/mt, up USD 270/mt from a day earlier.

The US Federal Reserve announced on Wednesday that the US economy was recovering mildly, with increase in November and December consumer expenditure, slightly improvement in enterprise loan demand, better control of commodity price and expansion in manufacture industry, but the US real estate market was still sluggish.  In addition, Germany’s 2011 GDP was also in line with market expectation, and the French government dispelled the rumor during the New York trading hours that France’s credit rating was cut down. Market sentiment was largely stable and most LME base metal prices extended upward momentum to close with slight gain. China will release CPI for December 2011. It is widely expected that China’s CPI will stabilize at 4%. If the outcome is in line with market expectation, base metal prices will gain support gain.

Base metal prices may be supported as market widely expects that China’s CPI will remain stable. However, close attention should also pay to PPI, which will also affect base metal price movement.  SMM expects that LME tin prices will find support at USD 20,500/mt. Supported by limited supply, SMM expects spot tin prices will remain firm and may advance further to the RMB 169,000-171,500/mt range on Thursday.