SMM Tin Market Morning Review (2013-5-27)

 

LME tin market overnight was quiet during Asian trading hours, and rallied quickly to USD 21,449/mt during European trading hours. Finally, LME tin closed at USD 21,032/mt, down USD 17/mt from a day earlier. Economic reports released by the US and European countries, including the US durable goods orders in April and German consumer sentiment index for June, were positive. But, the disappointing manufacturing data in China announced earlier still exerted a negative on the market. 

 

Better-than-expected European and US economic data released last Friday eased market risk aversion during the US trading session. US initial jobless claims dropped from 360,000 to 340,000 last week, below the estimate of 345,000. Continuing jobless claims also fell from 3.01 million to 2.91 million, lower than the forecasted 3 million. Markit flash US manufacturing PMI edged down from April’s 52.1 to 51.9 in May, but did beat the 51.2 estimate. Pollard, a US Federal Reserve (Fed) official, said the Fed is not eager to bring accommodative monetary policy to an end. John C. Williams, another Fed official, said whether QE will be expanded or curtailed depends on future economic indicators. Manufacturing PMI in France climbed from 44.4 to 45.5 in May, while manufacturing PMI in Germany also inched up from 48.1 to 49.0. The euro zone’s manufacturing PMI advanced from 46.7 to 47.8. The revised and preliminary Q1 GDP of the UK are the same, up 0.6% on a year-on-year basis, and 0.3% on a quarter-on-quarter basis. 

 

On May 24, the central parity rate of RMB against the US dollar inched up 6.1867, up eight basis points from the previous trading day. The RMB has appreciated 1.57% against the US dollar so far this year, well above the 1.03% recorded for the entire year of 2012. Besides, the RMB has appreciated 2.6% and 19%, respectively, against the euro and yen. Shen Danyang, spokesman of the Ministry of Commerce, said RMB appreciation will negatively affect Chinese exporters’ orders and profits. China is at lower risk of financial crisis that hit Latin America and Southeast Asia. That being said, if the Fed ends QE, the US dollar will strengthen, which will put downward pressure on RMB exchange rate. The Economic System Reform Department of the National Development & Reform Commission said urbanization plans during the 12th Five-Year period will be unveiled later this year. RMB 40 trillion in urbanization draft has been vetoed. Housing tax pilot program will be launched as appropriate. Focus will be made on individual foreign investment. Consumption tax reform will be implemented by adjusting structure and tax rate. 

 

In other markets, LME base metals were in fits and starts, with LME nickel down 0.84%. The US dollar index lost 0.14%. The Dow Jones Index gained 0.06%, whereas the NASDAQ shed 0.01%.

 

The US market will be closed on Monday for Memorial day, and meanwhile, LME market will also be closed for Spring Bank Holiday. In the domestic tin market, SMM expects domestic spot tin prices to hold between RMB 145,000-147,000/mt on Monday after LME tin market fell back last Friday.