SHFE Tin Hit a Record High, Some Smelters in Hubei Suspended Production for One Month amid the Environment Protection Inspection

SHANGHAI, Sep 22 (SMM) - LME tin contract prices have fluctuated rangebound since September 10 while SHFE tin stood firm. US Dollar fell slightly today. SHFE tin hit a record high of 266,190 yuan/mt after rising for four consecutive days. The open interest of SHFE tin rose 4,000 lots to 57,000 lots as of 10:29.

Tin prices trended higher as the market inventory continued to be at low levels, spot supply tightened. Tin ore imports declined 18.27% on the month to 15,557 mt in August. The demand of downstream solder companies rebounded in August. The output increased by 10.9% month-on-month and is expected to increase by 1.14% month-on-month in September due to the boom in the photovoltaic industry. The entry of long positions also pushed up prices by taking advantage of the impact of the short-term contradiction between supply and demand and the impact of the overall power rationing policy.

Spot supply tightened last week and there were rumours in the market that the reason lies in the power rationing in Yunnan. Smelters failed to achieve full capacity in Yunnan as the profits for the processing fees are not high. Therefore, the impact from the power rationing was not significant. The power rationing continued in Guangxi. The main smelters in this region saw a low level of output in August and lower operating rates.

The environmental protection inspection panel has arrived in Hubei. Smelters with 200 mt of output in August will suspend production for one month.

Tin prices are expected to trend higher amid high season, low inventory and limited increase in metal and ore supply. The only risk is that the undisclosed inventory may change into the actual inventory and spot supply increases.