Tin: Another Base Metal’s Ship Starts to Sink

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Last week, tin on the London Metal Exchange made a new 16-month low at $18,400/million tons. Through the first half of the year Tin prices stayed,  pretty much, horizontal. However, a rising dollar and a falling commodities market finally weighed down tin, making prices fall 20% in the second half of the year.

3M Tin LME Price Since 2013 (weekly)

3-month Tin LME Price Since 2013 (weekly). Source: MetalMiner

For most analysts this price drop has been a surprise. However, we have pointed out, since the beginning of the year, that there was no reason to take long positions on tin until the picture changed. Until now, the picture has only changed from bad to worse. A strong dollar was already putting pressure on metal prices and on top of that, the recent drop in crude oil drove every commodity down.

As always, it is hard to tell where prices will go from now and we don’t necessarily need to worry about that. The only thing buyers need to know is how they should act based on the current state of the market, and right now nothing indicates that buyers should take long-term tin positions. In a falling market, what looks cheap might become even cheaper. Industrial buyers need to stop listening to opinions and have a plan so they will be ready to hedge at the right time.

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