SMM News: on the evening of June 3, LME tin prices suddenly rose 2.4 per cent to $19200 a tonne, ending a sustained decline over the past 10 days. As for the sudden reversal in prices, market rumors may have something to do with Indonesia's Eid al-Fitr holiday this week. At the same time, the price fell in the early stage, there are also some short to make up for the factors.
Over the past 10 days, LME tin prices by a large number of overseas positions, inventory pressure fell sharply. On May 29, LME inventories suddenly soared by 905 tons, causing prices to plummet. At a time when spot water in the US market is as high as 450 US $575 / ton, it is very puzzling that so many tin ingots will be delivered to Baltimore warehouses in the United States at one time! Over the next few days, LME inventories continued to increase, more than doubling to 3510 tons as of June 4, up from 1660 tons on May 28. The reason for the significant increase in inventories is not yet known, but in terms of total inventories, LME inventories are still at their lowest level in decades and only slightly higher than in 2017. Obviously, bears hope that in the current period of weak macro-economy and low market confidence, they will take advantage of the pressure on inventories to put more pressure on prices. However, there is still a large rise in foreign spot, coupled with the reduction of Indonesian exports, prices still have a strong support below.
At present, the supply and demand of the Chinese market is not prosperous, and the shortage of raw materials limits the production of tin ingots in smelters. According to customs data, in April 2019, China imported 11724 tons of tin ore gross weight, with a total imported metal volume estimated at 3500 tons, down 3 per cent from the previous month and 20 per cent from the same period last year. Of this total, 11234 tons were imported from Myanmar, with an estimated metal content of 3300 tons, up 6 per cent from the previous month and down 23 per cent from the same period last year. China's tin imports totaled 16100 tons between January and April, down 29 per cent from a year earlier, while Myanmar imports totaled 14400 tons from January to April, down 35 per cent from a year earlier. Based on knowledge of Myanmar's local exports and production, exports are likely to remain low in the coming months.
With the decline in Myanmar's mine exports and the decline in domestic mine production, domestic raw materials continue to be in a state of tension. This phenomenon seems to be more severe in the middle and late May, with the consumption of pre-raw material inventory, smelters have to reduce processing fees to rush to buy raw materials, while reducing production, in order to adapt to the shortage of raw materials, the current situation of low processing fees. According to the survey, the domestic refined tin production decreased by about 10% from January to May compared with the same period last year.
However, on the other hand, consumption is also weaker, especially after the problems in the Sino-US negotiations, market confidence fell sharply, and the phenomenon of destocking by downstream enterprises is more serious. Although the domestic tin price has fallen by about 5000 yuan in the past ten days, it has not aroused the strong buying interest of downstream consumer enterprises. At present, consumer enterprises mainly adopt the strategy of purchasing on demand and holding down inventory. With the macro outlook uncertain, it is hard to improve in the short term.
Although the stock of the Institute is still at a high level, considering that the tin ingots of most smelters are zero inventory, as well as the very low level of tin ingot inventory downstream, we think that the overall social inventory is still relatively low. Generally speaking, the tin market as a whole is a state of low inventory and weak supply and demand. Although the trend of future prices will be supported by the fundamentals, the trend of the macro-economy, especially the evolution of the trade war between China and the United States, will have a greater impact on prices. Under the premise of short-term uncertainty, it will still fluctuate at the current price.