Chinese Tin Inventory Likely to Stay High on Weak Demand despite Expected Fall in Imports

SHANGHAI, Dec 23 (SMM) - Chinese tin ingot inventory has been accumulating recently, while overseas LME tin inventory has kept falling. As of December 9, the tin ingot social inventory in China totalled 7,305 mt, setting a year-to-date (YTD) high. SHFE tin inventory also refreshed the YTD high at 5,896 mt on December 16. On the other hand, on December 22, LME tin inventory dropped to the bottom in 2022 at 2,880 mt since April 22, 2022.

Nonetheless, the tin ingot social inventory in China reversed the previous upward trend and fell slightly on December 16. Specifically, the inventory in east China did not change much last week, while the inventory in south China fell slightly. The social inventory changes last week were in line with market expectations, and the warrants inventory dropped after SHFE 2212 was delivered last week. The overall tin inventory is likely to show few changes with SHFE moving rangebound. LME inventory fell slightly last week, and the inventory in Asia, Europe, and North America all declined to varying degrees.

The import window has remained closed after SHFE/LME price started to fall since mid-November. The import losses narrowed and turned into small profits on December 21, when the SHFE/LME price ratio stood at 8.13, but dropped to the negative zone again the next day with an import loss of 291.94 yuan/mt.

On the supply side, LME tin stocks continued to fall in November as a whole, with the Asian region contributing the most, while the stocks in Europe and North America also dropped steadily. Overseas premiums also rebounded slightly during the survey period. As the import window was closed in mid-November, the import of tin will drop in December considering the shipping cycle. According to the feedback from the traders, the current inventory of imported tin in the spot market was low, and there were also few quotes. 

On the demand side, in November, the operating rates of downstream solder companies fell month-on-month, and the companies gave a neutral expectation for the restocking demand before the Chinese New Year, which is unlikely to re-stage the previous prosperity. The rise in tin prices has contained the elastic demand in the market. Domestic social inventories have accumulated significantly as a result, and spot premiums have continued to fall.

To sum up, the import window has remained closed, while the elastic demand in the market is relatively weak. As such, the domestic net import of refined tin in December is expected to drop sharply. But the domestic inventory is unlikely to fall substantially, while LME tin inventory is forecast to stabilise.