Tin's ascent to decade highs fuelled by supply fears

Tin's ascent to decade highs fuelled by supply fears
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LONDON (June 11): Tin prices rose to their highest in more than a decade on Friday, as expectations of severe shortages due to supply and shipping disruptions created by Covid-19 restrictions fueled another speculative buying frenzy.

Benchmark tin on the London Metal Exchange was up 1.1% at US$31,545 a tonne at 1557 GMT.

Prices of the soldering metal earlier touched US$31,620 a tonne, the highest since May 2011.

"The story of deficits isn't going away. There are lockdowns in Asia affecting supply and demand is still rising," said a physical tin trader. "Lots of people are looking for material on the spot market and on the exchange."

TIN: Global tin supplies last year amounted to around 330,000 tonnes, a significant drop from about 360,000 tonnes in 2019. Supplies are under pressure again this year from lockdowns.

MALAYSIA: Fresh purchases of tin this week on the LME were triggered by Malaysia Smelting Corporation, the world's third-biggest refined tin maker, declaring force majeure on deliveries to customers.

CHINA: China's refined tin output at 14,036 tonnes in May was down 8.2% from April.

SHIPPING: Congestion at container shipping ports in southern China is worsening, as authorities step up disinfection measures amid a flare-up in Covid-19 cases, causing the biggest backlog since at least 2019.

PREMIUMS: The cost of tin on the physical market is typically the LME price plus a premium, which in the United States is at US$2,700 a tonne, compared with around US$600 a tonne at the end of last year.

The premium in Europe at about US$1,200 a tonne, compared with around US$400 at the end of December.

STOCKS: Historically low tin stocks in LME registered warehouses have reinforced the idea of scarcity and created a large premium for the cash over the three-month tin contract this year.

OTHER METALS: Industrial metals overall were boosted by a lower US currency, which makes dollar-priced commodities cheaper for holder of other currencies.

Copper was up 1% at US$9,992 a tonne, aluminium slipped 0.5% to US$2,462.5, zinc added 1.6% to US$3,044, lead gained 1.8% to US$2,215 and nickel ceded 0.3% to US$18,235.