Tin prices slip from multi-year high in tight LME market
- Benchmark tin on the LME was down 0.8% at $22,755 a tonne.
- Prices could rise further in seasonally strong demand after this month's Chinese Lunar New Year holidays but should fall to about $20,000 towards the end of the year.
LONDON: Tin prices fell on Thursday but remained near their highest since 2014 because of an acute shortage of material in the London Metal Exchange (LME) system.
Stockpiles in LME-registered warehouses are near their lowest on record and traders are paying huge premiums for contracts that promise quick delivery of metal.
Benchmark tin on the LME was down 0.8% at $22,755 a tonne at 1137 GMT, having hit $23,435 on Tuesday. Prices are up 12% this year after gaining 18% in 2020.
"Demand is very robust," said Commerbank analyst Daniel Briesemann, adding that speculators are likely to be making the market even tighter.
Prices could rise further in seasonally strong demand after this month's Chinese Lunar New Year holidays but should fall to about $20,000 towards the end of the year, he said.
LME STOCKS: Inventories in the LME warehouse system have slumped from about 5,500 tonnes in October to 810 tonnes, near record lows.
SPREAD: The premium for cash tin over three-month metal on the LME eased to $1,400 a tonne from $1,485 on Tuesday, the most in decades. A premium reflects a shortage of nearby material.
The tom/next spread between contracts for delivery a day ahead and a day after that has eased sharply from highs in late January.
ShFE STOCKS: Stockpiles in Shanghai Futures Exchange warehouses, however, have risen in recent months to 6,155 tonnes.
FUNDAMENTALS: About half of the roughly 350,000 tonnes of tin used annually is for solder to link components in electronic devices, with China the biggest consumer.
DEFICIT: The market will is expected to be in a deficit of 2,700 tonnes in 2021 after a 5,200 tonne shortfall in 2020, the International Tin Association said in December.
MARKETS: World stock markets pushed for a fourth day of gains as oil prices reached their highest in nearly a year and bond yields rose.
DOLLAR: The dollar strengthened, pressuring metals by making them more expensive for buyers with other currencies.
EXPLAINER: How the New Caledonia government collapse could affect the nickel market.
OTHER METALS: LME copper was down 0.2% at $7,830.50 a tonne, aluminium rose 0.3% to $1,980, zinc rose 0.4% to $2,625, nickel fell 0.3% to $17,585 and lead was 0.5% down at $2,024.
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