Tin Prices Rebound but Import Profits Likely to be Limited

SHANGHAI, Feb 2 (SMM) - The most-traded SHFE tin has weakened for three consecutive days after hitting a new 7-month high. Under the influence of market sentiment and fund, SHFE tin fell sharply in the night trading hours on February 1, but the decline narrowed today. As of noon, SHFE tin closed with losses of 1.31%, while LME tin rose 1.88%.

 On January 2, the average spot price of SMM 1# tin was 231,000 yuan/mt, down 5,500 yuan/mt or 2.33% from the previous trading day.

According to SMM research, during the early trading period on February 1, the quotations from smelters were cold and some smelters were more willing to hold the prices firm. According to traders’ feedback, the quotations and discounts did not change much compared with yesterday and the shipment in the spot market remained at a low level. The demand of downstream enterprises has not fully recovered after the Chinese New Year holiday. Coupled with the high prices, downstream enterprises were wait-and-see.

Fundamentals

On the supply side: The operating rates of smelters in Yunnan and Jiangxi dropped significantly. As of January 19, the total operating rate of the two provinces was 37.56%, and the TCs of tin concentrate remained stable.

In terms of inventory, the SMM database shows that the inventory of SHFE tin increased 58 mt in the previous two consecutive days (January 31 and February 1). The average spot premiums remained low but the transactions were limited. As of  February 1, LME Tin inventory remained stable at 3,015 mt. Import profits are likely to be limited but the quotations of imported tin increased.

On the demand side, post-holiday demand from downstream enterprises was relatively weak as they has not fully resumed, which may lead to increasing inventory.

To sum up, the weak demand led to the increase in inventory and market was wait-and-see amid the previous high prices. SMM believes that the recent tin prices may decline.