SMM Tin Market Morning Review (2013-3-21)

SHANGHAI, Mar. 21 (SMM) -- LME tin for delivery in three months opened at USD 22,840/mt and closed at USD 22,625/mt overnight, down by USD 130/mt from a day earlier, with the highest price at USD 23,140/mt and the lowest price at USD 22,546/mt. Daily trading volumes were 424 lots, down by 109 lots. Positions were 19,437 lots, down by 964 lots from a day earlier. LME tin inventories were 14,145 mt, up 65 mt from a day earlier.

LME tin is the only product closing with losses overnight. During the Asian trading hours, LME tin prices advanced to hit a high at USD 23,140/mt, but were weighed down to close at USD 22,625/mt during the European trading hours, down USD 130/mt from a day earlier.

The ECB promised to help Cyprus to ease its crisis, but market concern still remained. Longs and shorts power was balanced, and LME tin prices closed flat at USD 16,630/mt, with positions and trading volumes both down. During the Asian trading hours, Asian stock markets all strengthened, with the Shanghai Composite Index up over 2%. LME tin prices also advanced slightly. During the European trading hours, the Fed decided to keep interest rate unchanged, which boosted LME nickel prices to close at USD 16,815/mt, up USD 185/mt from a day earlier.

The financial minister of Cyprus is seeking for EUR 5 billion 5-year loan from Russia and asks for lower interest rate for EUR 2.5 billion loans already provided by Russia. The negotiation is still underway. It is reported that the Russia may ask for many additional conditions. For example, Russia may ask a harbor from Cyprus for berth of Russian warship, or ask for exploration right of nature gas resources from Cyprus. Meanwhile, the ECB warned that if the Cyprus does not accept the deposit tax proposal, the EBC will suspend bailout fund to Cyprus.

In the US, the FOMC decided to continue assets purchasing at the pace of USD 85 billion per month unless the unemployment rate is below 6.5% and the inflationary rate is higher than 2.5%. However, it cut economic forecast for 2013 from 2.3-3.0% to 2.3-2.8%, and employment rate from 7.4-7.7% to 7.3-7.5%. Meanwhile, Bernanke said that the Cyprus problem will not threat the US economy, which boosted the US equity market to close with gains.

According to meeting minutes from the Bank of England, most committee members were not supportive for QE for the fear of depreciation of pound sterling, but three members were still for the GBP 25 billion assets purchasing. Meanwhile, the OBR cut economic growth forecast for 2013 from 1.2% to 0.6%. Possibility for the UK to adopt QE is growing. Therefore, the pond weakened versus the US dollar.

The euro zone manufacture and service sector from the euro zone members will be released on Thursday, which will affect base metal price movement. SMM expects that LME tin prices will find support at USD 22,400/mt and will meet resistance at USD 23,000/mt. In China’s spot market, spot tin prices will move between RMB 151,000-154,000/mt on Thursday.