SHFE tin prices rose slightly, boosted by RRR cuts and interest rate cut expectations from the PBOC, as well as anticipated Sino-US economic and trade talks [[SMM Tin Futures Brief Comment]]

Daily Commentary on the Most-Traded SHFE Tin Contract on May 7, 2025

The most-traded SHFE tin contract (SN2506) fluctuated considerably today. In the morning session, it surged to 262,000 yuan/mt, buoyed by expectations for RRR cuts and interest rate cuts by the PBOC, as well as the US-China economic and trade talks. However, it pulled back in the afternoon session due to uncertainties surrounding US tariff policies and a strengthening US dollar. The contract ultimately closed at 261,230 yuan/mt, up slightly by 0.35% from the previous trading day. Trading volume and open interest increased slightly, intensifying the tug-of-war between longs and shorts in the market.

China's Policy Support: The PBOC announced RRR cuts and interest rate cuts today and, in collaboration with financial regulatory authorities, rolled out a "package of policies to stabilize the market and expectations," including measures to release liquidity and boost confidence in the capital market, providing short-term support for the valuation of industrial metals. Additionally, Q1 GDP growth of 5.4% and the trade-in policy have spurred a rebound in consumption, offering potential support for downstream solder demand for tin.

Concerns Over the US Economy: US Q1 GDP growth slowed to -0.3%, core PCE inflation surged to 3.5%, and consumer confidence fell to a record low. Market expectations for a US Fed interest rate cut have been pushed back to July. The US dollar index fluctuated at highs around 99.8, weighing on the overall valuation of the non-ferrous metals sector.