Tin Supply Tightens Not Because Rising Downstream Demand, SMM Notes

SHANGHAI, Jul. 7 (SMM) – Price gap between Yunnan Tin and in Yunnan narrowed constantly with week moving on. Many traders increased purchases of Yunnan’s other tin brands for profits from futures market in the first half of the week, tightening its supply, which allowed the price up.

On July 6, SHFE 1709 tin mainly fluctuated at around 144,000 yuan per tonne, down 1,000 yuan per tonne from July 5’s level, while price of Yunnan’s other brands were resistant to drop, which only fell 300 yuan per tonne.

In the first three days of this week, Yunnan’s other tin brands mainly traded at discounts of 2,500-3,000 yuan per tonne, against SHFE 1709 tin. Traders were willing to sell goods for profits from futures market after purchasing them with discounts at or above 2,500-3,000 yuan per tonne in spot market. Spot discounts of Yunnan’s other tin brands narrowed to 1,800 yuan per tonne on July 6, reducing purchase demand at spot market.

On the sales front, price gap between Yunnan’s other tin brands and small secondary tin brands widened as demand of the latter one weakened. Small secondary tin brands traded at discounts of 4,000-4,500 yuan per tonne in the first half of week, against SHFE 1709 tin, and the discounts fell to 3,500 yuan per tonne on July 6, cheaper than Yunnan’s tin brands. Yunnan Tin reported smallest discounts at 1,300 yuan per tonne on July 6 due to supply shortage.

To sum up, supply reduction of Yunnan’s other brands was due largely to rising purchases for profits from futures market by traders, but not downstream demand improvement, SMM noted. Tin market still reported oversupply, and SHFE tin warrants for futures delivery grew to 5,152 tonnes as of July 5.

Spot tin will hold discounts against SHFE 1709 tin in July-August due to off-season, SMM expects.

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