Supply angst fuels tin's climb towards January's one-year high

Supply angst fuels tin's climb towards January's one-year high
* LME/ShFE arb:

* LME tin stocks down 67 percent since Feb last year

* Traders watching large holding of LME tin warrants (Adds closing prices)

By Pratima Desai

LONDON, Feb 13 (Reuters) - Tin prices rose towards recent one-year peaks on Tuesday, boosted by worries about tighter supplies after data showed falling exports from Indonesia and a weaker dollar, which lifted all base metals on the London Metal Exchange.

Benchmark tin on the London Metal Exchange closed up 1.9 percent at $21,500 a tonne. Earlier, prices of the semiconductor metal touched a session high at $21,475 and late last month they touched $22,000, the highest since Feb. 2017.

"There's a shortfall in supplies from Indonesia and in the longer term there are concerns about replacement sources of tin," said Christoph Eibl, chief executive of Tiberius Asset Management, adding that the weaker dollar was a positive.

INDONESIA: The top producer's refined tin exports were 4,507 tonnes in January, down 36 percent from the previous month and 35 percent lower than the same month a year earlier.

CHINA: The world's largest tin consumer is China, accounting for nearly half of global demand estimated at around 380,000 tonnes this year.

STOCKS: Nervousness about shortages has been fuelled by falling inventories in LME-approved warehouses, which at 1,935 tonnes have crashed 67 percent since February last year, and cancelled warrants -- metal already earmarked for delivery -- at nearly 35 percent. <MSNSTX-TOTAL>

LARGE POSITION: Traders are also keeping a close eye on a large position holding between 50 and 79 percent of tin warrants. <0#LME-WHC>

SPREADS: Worries about nearby supplies on the LME market can be seen in the premium for the cash contract <CMSN0-3> over the three-month forward around $90 a tonne. The premium has been a feature since April last year.

FUNDS: Money managers' net long position at 1,384 lots or 6,920 tonnes has risen nearly 70 percent over the last month.

TECHNICALS: Upside resistance for LME tin is at $22,000 and strong support is around the 100-day moving average currently around $20,700.

DOLLAR: A lower U.S. currency makes dollar-denominated commodities cheaper for non-U.S. firms, which could help demand.

COPPER: Copper climbed 2.3 percent to $6,987 a tonne. Late last year it hit a four-year high above $7,300 a tonne.

DEMAND: "From a ‘top-down’ perspective we expect the Chinese and global demand will remain solid and we find that industrial metals outperform during periods of demand-led inflation," Citi analysts said in a note.

"From a bottom up perspective, copper and zinc are best placed to tighten and outperform as we head out of Chinese New Year and in to a strong seasonal period for metals demand."

PRICES: Zinc ended up 2.6 percent at $3,469 a tonne, lead rose 1.8 percent to $2,561, nickel added 2.7 percent to $13,450 and aluminium gained 0.7 percent to $2,139 a tonne.

(Editing by Matthew Mpoke Bigg and Susan Fenton)

First Published: 2018-02-13 04:38:14
Updated 2018-02-13 19:16:45

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