SMM Morning Review - 2012/1/13 Tin Market

SHANGHAI, Jan. 13 (SMM) -- LME tin for delivery in three months opened at USD 20,400/mt and closed at USD 21,100/mt overnight, up by USD 675/mt from a day earlier, with the highest price at USD 21,100/mt and the lowest price at USD 20,300/mt. Daily trading volumes were 390 lots, up by 69 lots. Positions were 15,836 lots, down by 118 lots from a day earlier. LME tin inventories were 11,250 mt, unchanged from a day earlier.

Affected by stronger euro, the European Central Bank president Mario Draghi hinted unchanged interest rate. Coupled with eased inflation pressure in China and successful auction of government bonds of two european countries, LME tin prices advanced all the way to close at USD 21,100/mt, up USD 675/mt or 3.30% from a day earlier, the highest in recent two weeks.

Auction of government bonds of Italy and Spanish was quiet successful on January. In addition, the European Central Bank decided to keep bench mark interest rate unchanged at 1%. In response, base metal prices rallied again. However, the rapid decline of China’s CPI and PPI heightened possibility that China may loose it monetary policy and fueled the expectation that China’s central bank may cut bank requirement reserve ratio in the following week, which boosted base metal market as well.

However, market concern over downward risk of the European economy will continue weigh on base metal market. LME tin prices advanced overnight, and will test sustainability at USD 21,000/mt. In China’s domestic market, spot tin prices fell to certain extent as pre-holiday stock replenishments from downstream consumers almost come to an end. SMM expects LME tin prices will lack upward momentum and may move in the RMB 169,000-170,500/mt range on Friday.