SMM Tin Market Morning Review (2013-3-22)

SHANGHAI, Mar. 22 (SMM) -- LME tin for delivery in three months opened at USD 22,625/mt and closed at USD 22,650/mt overnight, up by USD 25/mt from a day earlier, with the highest price at USD 22,800/mt and the lowest price at USD 22,400/mt. Daily trading volumes were 380 lots, down by 44 lots. Positions were 19,821 lots, up by 384 lots from a day earlier. LME tin inventories were down by 95 mt to 14,050 mt.

LME tin prices advanced to hit a high at USD 22,800/mt during the Asian trading hours on better-than-expected PMI from China. However, during the European trading hours, weak PMI dampened market sentiment, which weighed down the European and US equity market.

Cyprus received an ultimatum from the European Central Bank to raise enough money before the bank cut off its emergency support for the country next Monday, which renewed worries about situation in Cyprus.

Besides, weak economic data from the euro zone intensified market concern over the European debt crisis. The eurozone initial composite PMI for March was 46.5, the lowest in four months, and the initial manufacturing PMI was 46.6, the lowest in three months. Economic data from two major economies Germany and France were both deteriorating. Germany’s initial composite PMI for March was 51.0, the lowest in three month, and the initial manufacturing PMI was 48.9, below 50. France’s initial composite PMI for March was 42.1, the lowest since March 2009, and the initial manufacturing PMI was 43.9.

The US initial jobless claim was 336,000, below 340,000 expected, and the average jobless claim during the past four weeks was the lowest in five years. Existing housing sales for February rose by 0.8% to 4.98 million unit, the highest since November 2009. The Philadelphia Fed manufacturing index for March was 2, far higher than -3 expected. However, the upbeat economic data still failed to boost market, and equity market in the US and European all fell.

In China, the HSBC’s China initial manufacturing PMI for March was 51.7, higher than 50.8 expected and previous reading of 50.4, the highest in two months, suggesting that China’s manufacturing PMI is slightly improving. China’s central bank continued 28-day RMB 48.1 repos operation through open market on Thursday, and the bidding rate stabilized around 2.75%. China’s central bank recovered RMB 47 billion liquidity this week, and recovered total RMB 964 billion of liquidity over the past four weeks. Currently, liquidity was still ample in the market and the Shibor continued to lower.

SMM expects that LME tin prices will find support at USD 22,400/mt and Shanghai tin spot prices will move between RMB 151,000-154,000/mt on Friday.