SHANGHAI, Feb 7 (SMM) - Since January 30, tin prices have plummeted rapidly. On February 7, SHFE tin prices continued to fall, down 2.97% as of the noon close. The largest drop records of more than 12% in seven trading days. LME tin prices have also crashed since January 27. As of 13:42 today, the prices declined 2.76%. The largest drop is about 18% in eight trading days.
The average spot price of SMM #1 tin dipped 8.56% within four trading days. On February 7, it trended lower to 216,250 yuan/mt, down 2,500 yuan/mt or 1.14% from the previous trading day. According to SMM research, during the early trading today, the smelters’ willingness to quote slightly recovered, and some lowered their quotations to ship. The differences among manufacturers decreased slightly. According to some traders, the spot premiums rose slightly in early trading and the traders’ shipments dropped. The fall in tin prices yesterday encouraged some downstream producers to purchase.
Fundamentals Supply: The operating rates of smelters in Yunnan and Jiangxi provinces dropped significantly, and the tin concentrate TCs remained stable. The import window remains open but the profit is expected to be limited. Imported tin is more cost-effective than domestic brands.
In January, the operating rates of soldering companies slumped due to the Chinese New Year (CNY) holiday. Data showed that the decline in the operating rates of large and mid-sized enterprises is relatively slow, while that in the operating rates of small enterprises is faster.
In February, the strong rise of tin prices slowed down, and the probability of price sideways at high levels increased. The stable fluctuation of prices has a positive impact on the signing of orders of downstream enterprises and the procurement of raw materials. With the steady resumption of production of soldering enterprises, orders will gradually recover post Chinese New Year. However, companies said that it may be difficult for orders to return to the pre-holiday average level since the working days in February are few. To sum up, in February, the operating rates of soldering enterprises are expected to rebound significantly.
In terms of inventory, tin smelters were busy in delivery, and the SHFE tin warrants grew by 838 mt on February 6. The smelters maintained low operating rates during the Chinese New Year holiday, while the downstream companies are still recovering from the holiday, which pushed up the tin inventory. LME tin inventory remained stable, with little change in stocks in Asia and slight increases in stocks in Europe and the US.
On the demand side, downstream companies are still in the production recovery stage, thus the warrant inventories have increased. In the last trading week before the Chinese New Year of 2023, the most-traded SHFE tin contract fluctuated within a wide range. On one hand, downstream demand is gradually picking up; on the other hand, support of bullish expectations for tin prices has weakened.
To sum up, SHFE tin warrants surged compared with the previous trading day. Spot premiums grew greatly, and the shipments improved amid the production resumption of downstream companies. The large inventory accumulation is mainly contributed by the temporary imbalance between supply and demand caused by the different CNY holiday times taken by upstream and downstream enterprises. It is expected that with the resumption of downstream production, the supply and demand will return to balance, and the tin prices will fluctuate within a wide range.
