Tin Prices Reach Eight-Month High as Stocks and Supply Decline

on Dec 11, 2012
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**Tin Trading Above £23,000 a Tonne – Highest Since April**

The Financial Times reported on 10 December 2012 that on Monday, tin prices rose over 6 per cent as buyers reacted to declining supply and diminishing inventories. This recent price jump marks an eight-month high for the base metal, which currently trades well above the key technical level of $22,000 a tonne, heading for a record high on the London Metal Exchange (LME).

After being subdued amid weak demand, since the summer, tin for delivery in three months has risen as much as 35 per cent on the LME. The increase had its eight-month peak on Monday, when tin price climbed to $23,120 a tonne, reaching its highest level since April and marking a 6.2 per cent daily rally.
**Seasonal Production Decline and Decreasing Stocks Push Tin Higher**

The upwards movement of tin prices came on the back of two factors – reduced supply and a decline in stocks. On the supply end, the tin price jump followed a seasonal drop in output from the world’s largest tin producer, Indonesia, as heavy rains in the country affected mining and limited exports. The Indonesian trade ministry reported tin shipments of 7,946 tonnes in November, down 28 per cent from the previous month. Despite the monthly drop, however, data shows that November’s tin exports were still more than triple those of a year earlier, when producers restricted sales to give a boost to prices.

!m[From tin cans to the Tin Man. Who had better keep a low profile with LME-registered tin inventories at their lowest levels since March](/uploads/story/1017/thumbs/pic1_inline.png)The other reason which contributed to the recent surge in tin prices is diminishing inventories. Last week, the metal’s stocks at LME-registered warehouses fell to 11,195 tonnes, the lowest level since March. On Monday, traders even requested delivery of a further 575 tonnes from Malaysian stockpiles, as although the smallest market traded on the LME with annual production worth about $8 billion, tin is a crucial raw material for the global electronics industry, which uses it mainly in soldering.

**Traders Looking into Tightening Supply-Demand Picture**
According to traders, tightening tin supply-demand picture, together with the metal’s recent move above the key technical level of $22,000, had triggered a wave of buying by funds and consumers alike. The Financial Times quoted metals analyst at Standard Bank, Leon Westgate, as saying: “Tin is certainly one of the tighter metals out there.”
Nevertheless, Peter Kettle of an industry body, International Tin Research Institute, told the paper that the tin market was likely to see a deficit of about 10,000 tonnes this year, relative to annual production of 350,000 tonnes. Meanwhile, broker RBC said in a research note cited by Reuters today that it “would expect tin prices to be fairly choppy over the next few days as long-term, technical funds buy dips and trade/macro players look to sell any rally.”

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