MetalMiner posted an article in late March on the possible peak of tin, calling the top to the market a few weeks early. From that point, tin continued to power on up to $25,500/ton on the LME, but since then, the correction we called out has come through with a vengeance as prices have dropped to below $21,000 this week. The Asian markets have likewise followed the London market down. Prices in the Kuala Lumpur Tin Market (KLTM) have been sold off as long positions have been liquidated by traders desperate to avoid losses.
Expectations are that Chinese production will increase now that the bad weather in the first quarter has passed and those mills get back into full swing. However, a lack of scrap and a tight concentrates market has hindered a return to full production and exports have been limited by the 10% export tax and appreciating RMB making the export market less attractive.
Currently the domestic Chinese market is some 5% higher than the international market dissuading Chinese producers from selling their production outside the country. Tin plate production is forecast to rise by 1.2m tonnes in 2008/9 but some think a tight domestic supply market may hinder that figure being reached.
These supply side issues will limit the extent of the fall and we would expect prices to level off in the region of $17,000-20,000/ton this summer. It may not be a blue light special, but it all helps.