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SMM Analysis: Fundamental changes drive up tin price

2017-12-27



Several changes in the fundamentals of the tin market have sent the SHFE 1805 contract closing 1.6% higher on Tuesday December 26, outshining other base metals.

According to data from the SHFE, tin inventory stood at 5,236 mt as of Friday December 22, marking the eighth consecutive week of decline. The total drop amounted to some 46%. SMM also learned that tradable inventory in warehouses and smelters in East and South China has come down to some 10,000 mt.

On the raw materials front, China imported 250,000 mt of tin ore in the first 11 months of this year, down 42% from the same period last year, latest customs data showed. Such imports, with 5,000-6,000 mt of tin metal content per month, were unable to meet the country’s demand for tin ingot production.

China’s own tin ore production totalled 85,551 mt during January-November, up 1.2%. Supply from local mines in Yunnan, Hunan, Guangxi and Jiangxi provinces remained tight, SMM understood.

Separately, tin ore with invoice has become more popular among buyers due to strict inspections in the tin ingot market in Shanghai. In fact, leading smelters in Yunnan and Jiangxi also looked for ore with invoice. This meant the already tight supply has gotten even tighter.

For the finished products, supply of tin ingots has not recovered completely due to the three-week environmental inspection in Yunnan at the end of November and earlier this month. While some smelters have restarted the treatment process, the refining process has yet to resume.  

SMM believed China’s tin ingot production would remain limited in 2018 due to continuous environmental checks and tight raw material supply.

 Source: SMM