SMM Tin Market Morning Review (2013-5-15)

 

The disappointing industrial output data in China and market worries over its energy consumption weighed down metals prices. LME tin market moved lower during Asian trading hours, briefly sliding to USD 20,634/mt. LME tin pared some losses during European trading hours, but came under downward pressures at the tail of the trading, and finally closed at USD 20,816/mt, down USD 174/mt from a day earlier. 

 

The continuous improvement in the US labor market strengthens market confidence over its economic recovery, and this will generate more support for the exit from existing easing monetary policy. The Federal Reserve interest rate meeting to be held in mid June may send a clear signal to the market. Before this, metals markets will be sensitive to relative news, and any unexpected economic data. Philadelphia Fed President Charles Plosser said the Federal Reserve’s reputation may suffer if the existing asset purchasing program will not be cut next month in response to recent improvement in economy. He said the current growth momentum will allow the QE3 to end before the end of 2013, and expected the unemployment rate will drop to 7% in late 2013, and will fall to below 6.5% im 2014.  

 

The Eurozone industrial output rose a better-than-expected 1.0% in March, the largest gain since July 2011. The encouraging data boosted market sentiment over the economic outlook. However, the German ZEW economic climate index fell unexpected to 8.9 in May, sending the euro off from highs. 

 

China’s National Bureau of Statistics Tuesday announced that power consumption rose 6.8% YoY in April, and conditions improved from March. But, the year-on-year growth was only 3.7%, the lowest growth since January 2011. This, coupled with earlier disappointing results from industry, investment and consumption, has reduced market confidence over the growth momentum in China, allowing some investment banks to cut China’s GDP estimate.  

 

In other markets, the US dollar index added 0.52%, hitting a new high since last August. The US equities advanced across the board, reaching new record highs. The euro index was off 0.4% to a new 1-month low. Most Asian stock markets ended in a negative territory. LME metals markets fell across the board. 

 

The German and Eurozone GDP and UK employment data will be released today. LME tin is expected to meet resistance at USD 21,000/mt, and will experience corrections, with support at USD 20,500/mt. Trading in the domestic tin market dropped slightly during the afternoon business on Tuesday, but limited supply helped support prices. SMM expect domestic tin prices to fluctuate between RMB 146,500-147,500/mt on Wednesday.