SMM Tin Market Morning Review (2013-3-5)

SHANGHAI, Mar. 5 (SMM) -- LME tin for delivery in three months opened at USD 23,344/mt and closed at USD 23,380/mt overnight, flat from a day earlier, with the highest price at USD 23,380/mt and the lowest price at USD 23,050/mt. Daily trading volumes were 300 lots, down by 199 lots. Positions were 23,176 lots, up by 273 lots from a day earlier. LME tin inventories were 13,575 mt, unchanged from a day earlier.

LME tin prices fell to hit a low at USD 23,050/mt during the Asian trading hours, but later regained some losses to closed at USD 23,380/mt. China’s regulation to rein on real estate market weighed down the Shanghai Composite Index by 3.65%. During the European trading hours, base metal prices were still weighed by Italian’s parliamentary election and the US automatic spending cut.

The US Fed Vice Chairwoman Janet Yellen said the US inflationary rate will be lower than 2% in the interim term, and the unemployment rate will gradually fall below 7% by the end of 2014. In addition, she strongly defended the QE policies, claiming the premature ending of QE will negatively affect economic growth. Based on the newly-released economic data, the US economy is still under slow recovery. The Euro zone PPI in January annualized 1.9%, flat with market expectation but below previous reading. However, the Sentix investor confidence index for March was -10.6, far below market expectation and previous reading. Furth more, the yielding rate of the Spanish and Italian 10-year government rate rose by 4 basis points to 5.13% and rose by 8 basis points to 4.86% respectively, suggesting that marker concern over European economic recovery was still strong.

In Asian market, Japan’s February monetary base annualized at 15%, 4.1 percentages higher than previous reading, suggesting that inflationary level is growing. Meanwhile, the Shanghai Composite Index and the Shenzhen Component Index plunged by 3.65% and 5.29% respectively, suggesting that Chinese government’s new measures to rein on real estate market triggered wild concern. Besides, China’s central bank recovered RMB 910 billion liquidity through open market after Chinese New Year holiday, which exerted downward pressure on financial market.

Close attention should be paid to the National People's Congress and the Chinese Political Consultative Conference as well as non-manufacture PMI from major economies. SMM expects that LME tin prices will meet resistance at USD 23,700/mt and spot tin prices will move between RMB 156,000-158,000/mt on Tuesday.