SMM Tin Market Morning Review (2013-1-25)

SHANGHAI, Jan. 25 (SMM) -- LME tin for delivery in three months opened at USD 24,600/mt and closed at USD 24,560/mt overnight, up by USD 135/mt from a day earlier, with the highest price at USD 24,700/mt and the lowest price at USD 24,299/mt. Daily trading volumes were 377 lots, down by 222 lots. Positions were 23,129 lots, up by 415 lots from a day earlier. LME tin inventories were 13,135 mt, up 25 mt from a day earlier.
 
LME tin prices initially fell, but later advanced. Better-than-expected HSBC’s China PMI failed to boost LME tin price. However, during the euro zone trading hours, the euro zone manufacturing PMI and the US employment data were both positive, pushing up LME tin prices to hit a high at USD 24,560/mt, up USD 135/mt from a day earlier.
 
In the euro zone, comprehensive PMI and manufacturing PMI for January rose to a 10-month high to 48.2 and 47.5 respectively. Meanwhile, the seasonally-adjusted current-account surplus was EUR 14.8 billion, higher than 7 billion expected. The latest economic data showed that, the euro zone economy might hit bottom in October. Germany’s comprehensive PMI and manufacturing PMI posted 53.6 and 48.8 respectively, far better than market expectation and the highest in one year. Although economic data from euro zone and Germany improved, PMI from France hit the lowest at 42.7 since March 2009.
 
The US last week’s initial jobless claim unexpectedly fell from 335,000 to 330,000, the lowest since January 2008, and below 358,000 expected, which fueled market expectation that the Fed may halt QE measures in advance. The US Markit manufacturing PMI for January rose to 56.1, the highest since March 2011, suggesting US manufacturing activities expanded most rapidly in recent two years.
 
In China, the HSBC’s PMI for January rose for the fifth consecutive month at 51.8, the highest in two years, and higher than previous reading of 51.5 and 51.7 expected. Moreover, China’s central bank injected RMB 58 billion of liquidity through 7-day reverse purchase, with bidding rate at 3.35%.
 
LME tin prices will still find certain support at 20-day moving average. In China’s tin spot market, pre-holiday stock replenishment failed to materialize, which will weigh spot tin prices. However, since LME tin prices find support at 20-day moving average, any room for spot tin prices to fall will be limited. SMM expects that spot tin prices will move between RMB 158,000-161,000/mt on Friday.