LME tin market overnight dropped during Asian trading hours, and then lurched higher during the European trading hours in response to a weak dollar. LME tin market finally closed at USD 20,881/mt after briefly reaching USD 21,050/mt, up USD 61/mt from a day earlier. The disappointing initial jobless benefit claims weighed down the dollar, helping support metals prices. 

 

The US economic results announced yesterday were disappointing. The April housing starts fell 16.5% to 853,000, below market expectations, but building permits beat market estimate, up 14.3%. The labor market was disappointing. The latest initial jobless benefit claims rose to 360,000, above market expectations and higher than the previous data. The Philadelphia Fed manufacturing index decreased to -5.2 in May. Besides, the April consumer prices rose 1.1% on a yearly basis, well below market estimate and the previous data. Following the data release, Goldman Sachs cut the US GDP to 2.0% in the second quarter, and market speculation over the exit from existing monetary measures also increased. As dove officials in the US Federal Reserve (Fed) later said the Fed may consider adjusting its policy this summer at its earliest, the dollar weakened.  

 

The Eurostat reported March’s trade balance fetched a surplus of 18.7 billion euros on a seasonally basis, showing that eurozone exports grew for a third consecutive month. In March, exports grew 2.8% from February’s 0.2%, and imports fell 1%, down much from February’s decline. The release signals the improvement in the region, but internal demand remains weak. Hence, market confidence was still low, and the euro closed off 0.03%. 

 

The Ministry of Commerce Thursday announced the foreign direct investment was USD 8.44 billion in April, up 0.4% YoY, well below market estimate and the previous data. The slight increase in FDI against high funds outstanding for foreign exchange highlights the great pressure from inflows of hot money. To address the issue, China’s central bank has taken open market operations. On Wednesday, the People’s Bank of China conducted RMB 40 billion in 28-day repos and sold RMB 17 billion in 91-day central bank bills, withdrawing RMB 57 billion from the market. The open market operation may not be enough to ease the pressure from huge inflows of hot money, raising market expectations over a possible cut in interest rate cuts. 

 

In other markets, the US dollar index was up 0.01%, and the US equities ended in a negative territory. LME metals markets finished higher except nickel. 

 

The US Michigan Consumer Sentiment Index for May and the April Conference Board leading indicators will be released today. The mixed data recently has held the US dollar index around 84.09. LME tin market is expected to keep fluctuating between USD 21,100-20,500/mt. In domestic tin market, spot prices will move between RMB 145,500-147,000/mt on Friday.