SMM Tin Market Morning Review (2013-2-20)

SHANGHAI, Feb. 20 (SMM) -- LME tin for delivery in three months opened at USD 24,460/mt and closed at USD 23,985/mt overnight, down by USD 585/mt from a day earlier, with the highest price at USD 24,499/mt and the lowest price at USD 23,750/mt. Daily trading volumes were 778 lots, up by 301 lots. Positions were 22,952 lots, down by 1,025 lots from a day earlier. LME tin inventories were down by 135 mt to 13,315 mt.

Market concern over real estate market in China and US clouded outlook for global metal demand, depressing base metal market. LME tin prices plummeted to hit a low at USD 23,750/mt after opening and later closed at USD 23,985/mt, down USD 585/mt from a day earlier.

Former Italian Prime Minister Silvio Berlusconi restated on Tuesday that some countries may be forced to leave the euro zone if the European Central Bank does not become a lender of last resort. "The euro is a weak currency because it does not have a central bank to support it. If it continues to not have a bank to guarantee government bonds and is not prepared to print money, some countries may be forced to return to their national currency," he said.

On the macroeconomic data front, the adjusted output in construction sector in the euro zone dip by 4.8% in December, the largest decline in five months. Germany’s ZEW economic sentiment index rose to 48.2, the highest since April 2010, and far higher than 35.0 expected and previous reading of 31.5%. The US NAHB real estate market index was +46, lower than +48 expected and previous reading of +47.

China’s central bank injected RMB 30 billion liquidity through 28-day repos operation, with bidding rate at 2.75%. Considering the RMB 450 billion reverse repos expired on the same day, net capital recovered totaled RMB 480 billion. Given that RMB 410 billion reverse repos will be expired, net capital recovered is expected to exceed RMB 890 billion on Thursday.

SMM expects that LME tin prices will fall further to find support at USD 23,800/mt, and Shanghai tin spot prices will be dragged down to move between RMB 159,000-161,500/mt on Wednesday due to sluggish demand.