SHANGHAI, Jan 30 (SMM) - On the first day after the Chinese New Year holiday, SHFE tin hit a new high of 244650 yuan/mt since June 21, 2022, but then fell back quickly. As of 9:30, SHFE tin prices increased 3.16%. SHFE tin prices fluctuated widely in light of the active funds performance. During the CNY holiday, LME tin rose 3.47% on the week. LME tin fell 2.76% as of 9:35.

On January 20, the average spot price of SMM 1# tin was 229,750 yuan/mt, up 1.32% from the previous trading day.

 Before the holiday, domestic smelters were less willing to make quotations. Some smelters intended to hold the prices firm while some tended to quoted in discounts.

According to the feedback from traders, the shipments in the spot market shrank rapidly. At the beginning of last week, there were still some rigid demand. But the spot premiums remained low as the subsequent quotations offered by traders decreased rapidly. The pre-holiday restocking period of downstream companies ended and mainstream companies were on holidays. Coupled with the fear of high prices, the purchasing demand was suppressed.

Fundamentals

On the supply side, the operating rates of smelters in Yunnan and Jiangxi dropped significantly and the TCs of tin concentrate remained stable. The profits of import remained low, and the discounts in the spot market were still low.

In terms of inventory, the domestic social inventory continued yo increase as expected. The SHFE 2301 tin contract were delivered, but limited by the halted logistics services and the Chinese New Year holiday, the domestic warrant inventory only increased slightly. LME inventory continued to decline last week. As of the press time, SHFE inventory was 6,843 mt and LME inventory was 3,055 mt. SMM social inventory was 8,393 mt.

On the demand side, downstream companies were still on holiday. Coupled with the delivery of SHFE 2301 tin contract, warrant inventory increased. The tin prices remained strong due to the favourable market news and the bullish macro outlook. On the other hand, due to the longer vacations taken by downstream enterprises, the inventory is likely to increase in the short term.

To sum up, the accumulation of domestic inventory continues, and domestic tin prices are likely to increase amid the rising LME prices. However, due to the high prices and weak short-term demand, the increase in tin prices may be limited.