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SHFE tin fell sharply with a maximum drop of over 16% in four days, domestic and overseas tin prices are still expected to fluctuate strongly in March

iconMar 3, 2021 11:33
Source:SMM
Looking back on February, SHFE tin contracts dropped sharply at the end of the month after experiencing a frenzied increase in the previous period.

SHANGHAI, Mar 3 (SMM) — Looking back on February, SHFE tin contracts dropped sharply at the end of the month after experiencing a frenzied increase in the previous period. As of the last trading day of February, the closing price stood at 184,400 yuan/mt, up 12,290 yuan/mt from 172,110 yuan/mt on the last trading day of last month. In the middle of the month, the contract once rose to 19,470 yuan/mt, approaching 200,000 yuan/mt, but then fell for several days. After entering March, SHFE tin fell sharply after gaining profits, with a maximum drop of over 16% in four days. As of March 2, the contact stood at 177,110 yuan/mt, spitting out nearly half a month of increase.

In terms of inventories, there is currently no obvious sign of supply growth in the overseas tin market, and the market's worries about the tin market still exist. Although the LME tin inventories maintained a slight rebound, the overall stocks remained at a low level. As of February 26 (the last trading day of February), LME tin stocks stood at 1,730 mt, up 850 mt from 880 mt on January 29, which was still at a low level since May 2019.

At present, smelters in the domestic market have resumed production after the holiday. However, due to the tight supply of domestic tin ore, the prices held by tin factories were relatively firm. In the spot market, the performance of spot premiums and discounts was relatively stable. The premium prices made warehouse receipt holders unwilling to actively ship goods, and the market circulation spot was not abundant. According to the statistics of social warehouses in Shanghai, Guangdong, and Suzhou, there is a certain degree of accumulation in the post-holiday market. As tin prices fluctuated sharply and the increase was large compared with the pre-holiday prices, the restocking demand of the market was restrained to a certain extent, and the consumption of tin ingots slowed down. In terms of tin ore, the city of Bangkang in the Wa state of Myanmar has been completely lifted, and the export and transportation of tin ore will further resume normal.

Since March, SHFE tin fell sharply. In the night trading of March 1, LME tin fell more than 10% to $22,875/mt. The strong rebound in the US dollar in the past two days dragged down the trend of LME tin. In addition, it has demand for technical adjustments after the continuous rise. The decline is as expectations. The market outlook can focus on the impact of changes in domestic and foreign inventories and the trend of raw material supply on tin prices. Yesterday, LME tin recovered slightly. As of about 15:00, tin prices stood at 23,540 yuan/ton, basically paring all the increase since the second half of February.

SMM believes that the main factor driving the strong increase in tin prices comes from the market’s concerns about domestic and foreign supply. However, after the CNY, tin prices rose too fast due to the speculative funds. Although the supply gap still exists, the rapid rise of tin prices has put greater pressure on market consumption. Under the pressure of the sharp rise in costs, downstream users’ restocking demand and operating rates have been affected. Sluggish consumption led to the accumulation of stocks exceeding expectations after the holiday, which suppressed the trend of tin prices. Looking forward to March, as the current consumption expectations for the first half of the year are still relatively optimistic, normal downstream buying will gradually return after tin prices are revised. In addition, with the promotion of vaccines in European and American countries, the pandemic should be further improved. Consumption recovery will also constitute a positive support for tin prices. It is expected that domestic and foreign tin prices are still expected to fluctuate strongly.

Tin

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