SMM Tin Market Morning Review (2013-3-1)

SHANGHAI, Mar. 1 (SMM) – LME tin prices for delivery in three month opened at USD 23,570/mt and closed at USD 23,450/mt, down USD 25/mt from a day earlier, with intraday high at USD 23,700/mt and the low at USD 23,400/mt. Daily trading volumes were 252 lots, down 77 lots. Positions were 22,954 lots, down 116 lots. LME tin inventories were 13,600 mt, down 105 mt from a day earlier.

Overnight economic data from the US were mixed. The GDP for 4Q was far below market expectation, while last week’s initial jobless claim and Chicago Purchasing Managers index were upbeat. As market concern over the automatic spending cut grew, LME tin prices were weighed to close at USD 23,450/mt after hitting a high at USD 23,700/mt, down USD 25/mt from a day earlier.

On the macroeconomic front, the two parties still did not reach consensus on automatic spending cut. The US dollar index surged to 82.

On the macroeconomic data front, the US GDP for Q4 revised from -0.1% to 0.1%, far below 0.5% expected. The US employment market slightly improved. Last week’s initial jobless claim fell by 18,000 to 344,000. The Chicago Purchasing Managers index improved from 55.6 to 56.8, higher than market expectation. Germany’s seasonally-adjusted unemployment data for February reduced by 3,000 to 2.92 million, and unemployment rate was 6.9%, the lowest in 20 years. The positive data boosted European equity market.

In China’s domestic market, China’s stock market rose by 2.26% as market rumored that Chinese government may launch a new round of QE, but rumor needs further confirmation. China’s central bank temporarily eased open market operation on Thursday, and this week’s net capital return totaled RMB 5 billion. It is believed the central bank's move tighten liquidity at the end of the month is mainly due to news that new foreign exchange at financial institutions totaled RMB 600 billion in January, exceeding RMB 500 in the whole year of 2012. After China’s stock market closed, the China Securities Regulatory Commission (CSRC) dispelled the rumor on reissuing of new stocks in April.

PMI from major economies and nonfarm employment data from the US will continue to affect base metal price movement. SMM expects that LME tin prices will fluctuate around existing level and Shanghai tin spot prices will move between RMB 156,000-158,000/mt on Friday.