SHFE Tin Stopped Falling and Stabilised, Some Smelters Reduced the Production as TCs Declined

SHANGHAI, Dec 20 (SMM) - Recently, SHFE tin fluctuated and fell. After falling for three consecutive days, SHFE tin prices stopped falling and fluctuated today. As of noon, LME tin prices rose slightly by 0.22%.

Spot prices: The average spot price of SMM 1# tin was 193,000 yuan/mt, down 500 yuan/mt or 0.26% from the previous day.

On December 19, smelters were more cautious in quoting during the early trading period while some smelters lowered their quotations to promote transactions. Therefore, the price spread among manufacturers expanded. According to traders’ feedback, the premiums continued to rise, but the number of market quotations decreased and the overall shipments slightly weakened. Downstream enterprises purchased as needed, and the price drop drove up some demand.

Inventory: Last week, the domestic tin inventory decreased slightly. As of December 16, the inventory declined 179 mt on the week. In terms of regions, the inventory in east China did not change much last week while the inventory in south China declined slightly. On December 19, the inventory of SHFE tin warrants decreased 634 mt to 4,905 mt. Amid the delivery and the spot transactions, the domestic warrant inventory fell sharply. As the tin prices fluctuated in a narrow range, the inventory also fluctuated narrowly.

As of December 19, LME tin inventory was 2,995 mt, a decrease of 10 mt from last Friday. The inventory in Asia, Europe, and North America all declined to varying degrees.

Output: Domestic refined tin output was 16,200 mt in November, down 3.26% MoM and up 21.98% YoY, and the combined output from January to November fell by 0.8% YoY, according to SMM research. The actual domestic refined tin output in November was slightly better than expected. In December, the tight raw material supply and the drop in TCs may further squeeze the profits of smelters. On the other hand, amid the continued rise in tin prices, downstream enterprises are in fear of further price increase. Therefore, the market demand is suppressed, and the spot market weakens. Some domestic smelters have lowered their expected output. SMM expects that the domestic refined tin output will fall significantly in December to 15,040 mt.

Fundamentals: The supply of raw materials continued to be tight, and TCs declined again. The operating rates of smelters in the two provinces fell slightly, and some smelters reduced the production. On the demand side, the decline in tin prices stimulated the release of demand and enterprises were willing to inquire and purchase. As such, the increase in domestic inventory slowed down significantly. At present, the TCs remained low, and the demand for stockpiling was not obvious. At present, the supply and demand remained stable, and the market was wait-and-see. The tin prices may continue to move sideways in a narrow range.