SMM Morning Review - 2012/1/16 Tin Market

SHANGHAI, Jan. 16 (SMM) -- LME tin for delivery in three months opened at USD 20,990/mt and closed at USD 21,075/mt last Friday, down by USD 25/mt from a day earlier, with the highest price at USD 21,250/mt and the lowest price at USD 20,500/mt. Daily trading volumes were 289 lots, down 101 lots. Positions were 15,866 lots, up by 30 lots from a day earlier. LME tin inventories were down by 45 mt to 11,205 mt.

LME tin prices advanced to hit a high of USD 21,250/mt during the Asian and early European trading hours last Friday, but fell rapidly to hit USD 20,500/mt due to credit rating cut of European countries. At the tail of the trading, LME tin prices were boosted to pare certain losses and closed at USD 21,075/mt due to positive economic data from the US, down USD 25/mt from a day earlier.

It was announced on January 13th that Standard & Poor’s would cut credit rating of some European countries, fueling risk aversion sentiment and weighing down non-US dollar currencies. In response, the US dollar advanced significantly on risk aversion buying. Deposits at European central banks recorded a new high of EUR 489.9 billion last Thursday, stoking market concern over support for real economy. In addition, auction of Italy’s government bond was moderate, making investors cautious over the European debt crisis. LME base metal prices closed with losses on credit rating cut of European countries.

Market concern over the European debt crisis exacerbated last Friday, and shall continue to weigh on base metal market on Monday. SMM expects that LME tin prices will hover at high levels and will test support at USD 21,000/mt on Monday. In the Shanghai tin spot market, downstream demand gradually waned as most downstream consumers almost completed pre-holiday stock replenishment, but limited supply will support spot tin prices to certain extent. SMM expects that LME tin prices will move in the RMB 170,000-171,500/mt range on Monday.