Supply cuts, stable demand to put a floor under tin market

SHANGHAI, Nov 28 (SMM) – Supply cuts across smelters and stable demand across downstream consumers are expected to put a floor under the falling tin market, SMM believes.

Recent consecutive declines sent both LME and SHFE tin to their previous lows, reversing earlier gains. In overnight trades, the SHFE 1901 contract fell to the 143,000 yuan/mt level and the LME three-month contract refreshed the lowest since August 2016, at $18,145/mt.

Output cuts across major tin producers, triggered by shrinking ore imports from Myanmar as well as limited supplies across the markets, pushed tin prices to highs of 155,000 yuan/mt earlier in the month.

As gains in prices prompted some sellers to offload cargoes, supplies across the markets grew and depressed tin prices. A stronger US dollar and declines in crude also weighed on tin prices.

Despite the falling market, fundamentals continue to point bullish signs. With continued output cuts or suspension, most smelters in Yunnan and Jiangxi were keen to hold offers firm. Shortages of raw materials and low processing fees also eroded production enthusiasm among smelters.

Data from China Customs showed that imports of tin ore shrank 9.7% month on month to 13,768 mt in October. In January-October, imports lost 15.4% from the same period last year and amounted to 185,900 mt.

Ore output at Wa State remains low with 3,500-4,000 mt in tin content per month.

Drops in tin prices fuelled purchasing interest among downstream consumers, which improved spot prices. In the spot market in Shanghai, Yunnan Tin Group’s resources on Wednesday November 28 traded in premiums of 1,200 yuan/mt over the SHFE 1901 contract, with other Yunnan materials in premiums of 300-500 yuan/mt.