While most analysts were calling for an increase in tin prices this year, we were very skeptical as we pointed out in February:
“Despite the tin deficit, we believe that tin has more potential on the downside than on the upside. While the rest of the base metals complex keeps trending downward, it is hard to see tin prices trading above $25,000 per metric ton.”
So far we have been right. Tin hasn’t been able to trade above $24,000 in this first half of the year. In fact, tin prices declined 7% last month.
We would agree that the market is tightening as tin supplies from Indonesia, the world’s largest exporter, have been hit as a result of new regulations. However, it is very difficult to predict how and when these imbalances will be priced in. For this reason, we remain rather neutral on tin and wouldn’t suggest taking long-term positions unless tin hits our price target.
What This Means For Metal Buyers
Despite the fact that more analysts have been calling for a deficit in the tin market, tin hasn’t been able to turn up yet. We recommend buyers wait until we see price strength before taking positions. If prices succeed in breaking above $24,000, that would be the best time start buying/hedging.