SHANGHAI, Jul 28 (SMM) - Spot prices

As of July 28, the average spot price of SMM #1 tin dropped by 2.6% on the month.

According to SMM's latest survey on July 27, the quotation of some smelters was lowered in the early trading along with the falling futures prices. According to some traders, the number of quotes in the early trading increased, while the premiums did not change along with the falling prices. It was still more difficult to ship in the Guangdong market than in Shanghai. Downstream enterprises purchased on rigid demand. Traders generally lowered their quotes to ship, and the brands with lower premiums were more popular.
Premiums and discounts of tin ingot

In July, the average spot price of domestic tin ingots was still quoted at premiums, but the prices were on a downward trend. Since July 21, the lowest price has been slightly discounted.

Operating rates

According to the SMM data, the operating rates of tin companies in Yunnan and Jiangxi were relatively stable in July.

Last week, the comprehensive operating rate of tin companies in Yunnan and Jiangxi rebounded slightly from the previous week as the smelters resumed their production. 

In Yunnan, the operating rates rose slightly, but the data was still low. Except for a few large factories that are still being overhauled, other smelters have resumed the production. However, due to the thorough overhaul and shutdown, it will take a long time for the output to fully return to the normal level. Therefore, some smelters with large output indicated that the finished product will be released in the market in August. The increase in operating rates last week was mainly due to the converting of producing intermediate products into finished products.

In Jiangxi, the operating rates increased slightly last week. The smelters in Jiangxi that were not overhauled last week still maintained the normal production and shipment, and others are now gradually resuming their production. It still takes some time for most finished products to be released. 

In short, last week, the comprehensive operating rates of smelters in Yunnan and Jiangxi rose slightly as expected. According to the SMM survey, the resumption of production in domestic mainstream smelters is progressing steadily at present, and it is expected that the operating rates in the future will rise gradually.
Spot import profit and loss

As of July 27, imports of tin ingot were at losses on the month. According to the data today,  the imports gained profits. As of 13:33, the SHFE/LME price ratio was 8.05.
Inventory

According to the SMM data, domestic tin ingots inventory kept falling in July, while LME tin ingots inventory was increasing.

On July 27, the SHFE warrants decreased by 4 mt to 3,283 mt, while LME tin increased by 50 mt to 3,720 mt.
SMM prospect

On the macro front, the Fed announced an interest rate hike of 75 basis points this morning, raising the range of the federal funds rate to 2.25%-2.5% which is expected to continue to be raised. What's more, Powell's statement strongly supports the market confidence, but the market should keep an eye on the US GDP data for the second quarter. After the announcement of the Fed's decision to raise interest rates by 75 basis points, US stocks soared, and cryptocurrency and gold prices also rebounded. The prices of risky assets rose slightly, but the US dollar index declined. Recently, the domestic prices of SHFE tin were under the pressure from the macro front, which may be slightly weaker than before.

According to the SMM survey, with most domestic enterprises resuming the production and output of tin ingots in early August, the narrowing import losses, and poor downstream consumption, the social inventory across China may increase in the second half of August.

However, the supply of tin ore in China has been slightly tightened recently. According to some enterprises, in Yunnan, the latest quote of tin concentrate (60%) TCs was lower than 20,000 yuan/mt, which may cast a negative impact on the production of domestic smelters. The output of smelters that resumed the production this time has not directly recovered to the level before the shutdown and overhaul. More enterprises will hold a wait-and-see sentiment, and they will keep an eye on the downstream consumption to control the progress and production level of the resumption.

Therefore, the supply in the tin ingot market may be relatively sufficient. SMM expects the tin prices to remain rangebound at low levels.