SMM Analysis: Macro-Driven Tin Price Rise May Be Short-Lived amid Poor Fundamentals

SHANGHAI, Jan 17 (SMM) - The US dollar index continued to fall yesterday, reaching a new low of 101.77 since June 3, 2022, down 0.01% as of CST 15:25. Boosted by softening US dollar, SHFE tin rose for four consecutive days and once rose by nearly 5% to a new high of 230,270 yuan/mt since June 22, 2022. LME tin reached a new high of $29,400/mt since January 13.

The average spot price of SMM #1 tin stood at 6,250 yuan/mt on January 16, an increase of 2.83% from the previous day. Spot tin prices rose for the fourth straight day, up 11.3% in four days.

The operating rates of smelters in Yunnan and Jiangxi provinces fell as expected. Some smelters will shut down for maintenance during the Chinese New Year (CNY), resulting in a decline in raw material demand. The TCs of tin concentrates dropped slightly. As of January 13, the operating rate of smelters in Yunnan was 62.21%, and that in Jiangxi was 39.63%. Compared with the previous day, the TCs of tin concentrate in Yunnan and Jiangxi both dropped by 500 yuan/mt.

In terms of imports, as of January 13, the profit window for refined tin imports remained open, but the import profit was about 1,000 yuan/mt lower than the previous day due to falling SHFE/LME tin price ratio. 

On the demand side, the pre-holiday stocking of downstream companies is coming to an end. Soldering companies were on CNY break in advance one after another. As a result, domestic social inventories once again accumulated significantly. As of January 13, SHFE tin inventory added 949 mt on a weekly basis, while domestic social inventories rose 809 mt. 

The positive macro sentiment shored up tin prices. However, in the context of falling demand and rising inventory in the run-up to the CNY holiday, whether tin prices will climb further depends on movement of US dollar and macro front.