High inventories keep tin prices under pressure

SHANGHAI, Jun 19 (SMM) – London tin reversed overnight gains that were bolstered by renewed US-China trade optimism on Wednesday, as tin inventories across the London Metal Exchange-approved warehouses rose to highs since 2016.

LME tin inventories stood at 6,035 mt as of June 18, with an increase of 1,335 mt, or 28.4% on the day and a gain of 1,085 mt, or 30.01% in the prior day. The highest since 2016 for LME tin inventories stood at 7,370 mt, and was hit in June 2016.

Overnight signals of renewed trade talks between Washington and Beijing boosted hopes for an easing in the escalated trade dispute, and cheered the market.

Three-month LME tin rebounded to close the trading day 1.59% higher at $19,205/mt, snapping a two-day losing streak, while the most traded September contract on the Shanghai Futures Exchange advanced 0.59% to end at 144,720 yuan/mt.

Both LME and SHFE tin, however, failed to hold onto their gains today, with LME tin losing close to 1.7% as of CST 16:11. SHFE tin pared overnight gains to finish the trading day only 0.13% higher at 144,050 yuan/mt.

The Federal Open Market Committee began its two-day meeting on Tuesday, and will issue a statement and economic projections at the close of Wednesday’s session. The US dollar is expected to remain firm in the short term as the market expects a low chance of a rate cut at this meeting.

This, together with high inventories, will keep LME tin under pressure. Support is seen at $18,500/mt, while resistance is at the 40-day moving average as high as $19,400/mt.

For SHFE tin, support is seen at 143,000 yuan/mt while resistance is at the 40-day moving average as high as 145,500 yuan/mt. Data showed that SHFE tin inventories expanded to 8,126 mt last week, after four consecutive weeks of declines.