SMM Tin Market Morning Review (2012-3-29)

SHANGHAI, Mar. 29 (SMM) -- LME tin for delivery in three months opened at USD 23,000/mt and closed at USD 23,100/mt overnight, flat from a day earlier, with the highest price at USD 23,000/mt and the lowest price at USD 22,888/mt. Daily trading volumes were 360 lots, down by 114 lots. Positions were 20,495 lots, down by 102 lots from a day earlier. LME tin inventories were 14,025 mt, up 190 mt from a day earlier.

LME tin prices slightly inched down during the Asian trading hours, but pared early looses to close flat at USD 23,100/mt during the European trading hours. China’s stock market fell sharply on concern on the euro zone and Sharply decline of China’s stock market. Market concern over the Cypriot bailout agreement and Italian political condition stoked risk aversion sentiment.

In the US, seasonal rate of final GDP for Q4 2012 rose by 0.4%, lower than market expectation but higher than previous reading. The Chicago purchasing manager index for March was 52.4, far lower than previous reading and market expectation. Last week’s initial jobless claims were higher than expectation at 357,000. Affected by downbeat economic data from the US, the US dollar index slightly fell.

Bank depositors were relatively calm after Cyprus banks reopened Thursday under tight capital controls to prevent massive bank runs from the debt-ridden Mediterranean island country. However, the euro may still be weighed before the trend in the euro zone turns clearer. Possibility for organization of new cabinet in Italy is slim, so a new parliamentary election is impending, which fuels market concern. In addition, Germany’s unemployment rate stabilized, but unemployment number rose higher than expectation by 13,000. Due to lower financing demand from companies in private sector, M3 of euro slowed to 3.1%, lower than 3.3% expected and reading in January, reflecting weak confidence in the euro zone.

China Banking Regulatory Commission issued a notice on standardizing financial investment services of commercial banks, which weighed Shanghai Composite Index down by 2.82%. The National Bureau of Statistics released on March 28th, China’s industrial profits were RMB 709.2 billion during the first two weeks, up 17.2% YoY, evidencing that China’s economy is under weak recovery. In addition, the State Administration of Taxation still has not issued detailed rules on the 20% tax on second-hand housing transactions, so China’s real estate market is expected to rise moderately. Besides, repos totaled RMB 5 billion this week, and no bills and reverse repos matured, bringing net capital return to RMB 57 billion. Due to growing inflationary pressure, central bank’s monetary policy shifted from loose to neutral. 

LME market will be closed on Easter Day, and SMM expects that Shanghai tin spot prices will stabilize between RMB 151,000-154,000/mt on Friday.