SMM Review and Forecast on SHFE Tin

SHANGHAI, Oct 28 (SMM) - The production in the upstream mainstream smelters stabilised. Guangxi gradually resumed production from power rationing. The increase in processing fees has stimulated the enthusiasm of smelters to produce, and some companies have reopened primary ore production lines. The output is expected to increase on the month in October.

The main downstream companies in the industry chain are solder processing companies and end-users include electronics companies and photovoltaic companies, which are located in the Yangtze River Delta and the Pearl River Delta. This round of power rationing has an impact on the areas where downstream companies are concentrated. Specifically, the direct impact on the solder companies is small, but the reduction of orders caused by power rationing is greater. Downstream companies generally lowered their October output estimate. However, the power rationing impact gradually fades due to energy supply guarantee measures and the company's own adjustment. The inventory is at low levels and there are no signs of accumulation in the short term. Spot premiums fluctuate at high levels. The sharp decline in futures boosted premiums, indicating that the goods are not adequate. Futures market stabilised this month. Prices fluctuated at high levels after the National Day holiday and there was no obvious continuous large fluctuations. The prices touched limit down today as coal prices declined and the shortage of energy is eased, coupled with short positions. 

The power rationing policy impact on downstream producers gradually fades. With the gradual stabilisation of the global pandemic, the domestic photovoltaic industry and the new energy automobile industry are booming, with stable demand and bullish expectations. The inventory keeps low and spot premiums are at high levels, thus, tin prices are unlikely to fall sharply in the short term. Prices are expected to be supported by strong demand in the long run. But tin prices are likely to be volatile amid bearish sentiment.