LME Tin Marks a 5-Year Low, Base Metals Are Falling Like Dominoes

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3-Month tin on the London Metal Exchange has fallen as low as $16,400 per metric ton, recording a new 5-year low. Tin prices have fallen 28% this year to date. Given Indonesia’s attempts to regulate supply, no one expected to see tin prices sinking like they have, well maybe we did expect something…

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Indonesia’s exports of refined tin totaled 19,700 mt in the first three months of the year, up almost 20% on the same period of 2014, so the raw ore export ban does, at least, seem to be doing what it was intended to do, increase local refining.

Why is Tin Falling?

Two major developments help explain tin’s steep price drop:

  • China managed to offset the drop in Indonesian exports. Chinese demand for imported refined tin declined as the country found a new source of mined supply. China increased its imports of ore and concentrates from Myanmar and the country has now moved from being a net importer of tin in recent years, to now be self-sufficient as it lifts its refined tin production.
  • Commodities continued to fall, driven by a strong dollar and low oil prices. As we’ve discussed before, a metal has a very hard time to move up while commodity markets fall. Tin is not the only metal falling to record lows this year. With tin’s drop and nickel prices recently plummeting, we might see these other two metals falling to record lows as well.

Tin prices now look oversold and bottom pickers might help lift prices during the second quarter, however, the long-term outlook is far from bullish, especially while commodities keep falling.

Remember to always buy on strength rather than weakness rather than try to pick bottoms. You never know how far a metal can fall in a market like this.

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