Tin Price Likely to Open High after CNY Holiday

SHANGHAI, Jan 28 (SMM) - Review of tin futures contract during Chinese New Year (CNY) holiday: SHFE tin market was closed for CNY holiday starting from the evening of January 20. The most-traded SHFE tin contract closed the day session of January 20 with an increase of 7.44% at 238,960 yuan/mt. LME tin remained strong during the holiday, and stood at $31,280/mt as of the time of this release, with a weekly gain of 5.43%.

In detail, LME tin rose slowly at the beginning of the week, and then accelerated to a high of $32,000/mt before pulling back. LME tin inventory added 125 mt during the holiday to 3,055 mt as of Friday January 27. 

On the macro front, the number of initial jobless claims in the United States dropped to 186,000 from the previous value of 192,000, lower than the market's previous expectation of 205,000.

On the fundamentals, domestic smelters still maintained production during the CNY holiday. Specifically, the operating rates in Yunnan were higher than those in other provinces like Jiangxi as some smelters in Yunnan maintained normal production during the holiday. The continuous rise in tin prices has pushed up the processing fees, which, however, were still constrained by factors such as tight raw material supply in the holiday. The import window opened briefly ahead of the holiday, but the profitability was not satisfying.

On the demand side, domestic refined tin smelters restocked properly before the holiday. Since downstream companies generally have longer holidays than upstream ones, the market players generally hold a neutral outlook on the orders post the CNY holiday. The social inventory is expected to accumulate significantly after the CNY holiday as the smelters maintained operation while downstream players were off during the holiday. 

Looking ahead, the strength of LME tin during the CNY holiday is expected to boost SHFE tin post the holiday. However, the tin market remains under pressure amid accumulating social inventory and strong risk aversion sentiment on high tin price. The market players shall watch the market when tin price hovers around 250,000 yuan/mt.