Tin experienced its largest ever drop in its 3-month price history, falling more than 20% at one point in after-hours trading on the LME to US$ 39,080/tonne. Opening from the previous close of US$ 44,205/tonne, prices are down again.
Traders have increasingly mentioned the possibility of an aggressive price correction in recent weeks. The trigger appears to have been a combination of profit taking at highs of US$ 51,000/tonne and risk reduction related to problems in the LME nickel market. We expect prices to balance between a more attractive level for consumers – who have been reluctant to purchase recently – and one that continues to incentivise new tin production.
Chinese refined tin output was 12,165 mt in February, a decrease of 10.48% from January, and a slight increase of 2.84% year-on-year, according to SMM research. The combined output in January-February dropped 7.02% YoY. The main reason for the MoM decrease in February was that the smelters were closed for the Spring Festival holiday, which resulted in less working days. And the maintenance of some smelters also lowered the overall output. A few smelters maintained normal production during the Spring Festival holiday, hence the output changed little MoM. According to SMM research, mainstream smelters have basically resumed normal production in March, and only a few smelters are still under maintenance. The output of domestic smelters in March is expected to rebound significantly compared with February. SMM predicts that the domestic refined tin output in March will be 13,450 mt.