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London Metal Exchange is running short of tin-18th China(Guangzhou)Int¡¯l Non-Ferrous Metal£¨Copper£©Exhibition
5/17/2017 Copper exhibition -non-ferrous metals expo |
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REUTERS reported that London Metal Exchange (LME) is running short of tin. As per report headline stocks of the soldering metal in the LME''s warehouse system fell to 2,290 tonnes this week. It''s the lowest level in at least 20 years but in truth any historical comparison is lost in the mists of time because the world of metals trading and the LME''s place in that world were so different back then.
Unsurprisingly, low inventory is once again generating tightness across short-dated time-spreads, extending a pattern that has been running for a couple of years now.
But the outright price is underperforming. Tin, currently trading just shy of USD 20,000 per tonne, is down more than 5 percent on the start of the year and vying with nickel for worst performer among the major LME metals.
Which begs the question of whether the LME is reflecting the wider state of the market or its own dwindling liquidity.
There is, for example, now more tin sitting in warehouses operated by the Shanghai Futures Exchange than in the LME system.
Graphic on LME and Shanghai Futures Exchange stocks:
The LME tin contract spent much of last year in backwardation, cash metal commanding a scarcity premium over forward dated prices.
After a brief respite in the first quarter of this year, when LME stocks rebuilt to 5,995 tonnes in mid-February, tightness has returned.
The benchmark cash-to-three-months LME spread was valued at $71 per tonne backwardation at the Thursday close.
The LME''s "tom-next" spread, which is the cost of borrowing metal for a day and which is often a flashpoint for positioning tension, flared out to USD 19 backwardation on Friday. That''s the widest since last October.
This may have something to do with a dominant long position that has been holding between 50 and 80 percent of LME stocks over recent days.
But LME stocks are so low that it may be nothing more than a passing misalignment of long and short positions. In such a crowded space as the London tin market, it doesn''t take much movement for borrowers and lenders to trip over each other.
The curious thing is that right now there is no particular sign of broader physical tightness in the tin market.
Indonesia, the world''s largest exporter of tin, is enjoying one of its rare periods of supply regularity.
This time last year, shipments were hit by a double whammy of heavy rain on the tin-producing islands of Bangka and Belitung and another tightening of export regulations by the Indonesian government.
This year, Indonesian shipments have been running smoothly. The official export count was 24,400 tonnes in the first four months of 2017, compared with 16,600 tonnes a year earlier.
-18th China(Guangzhou)Int¡¯l
Non-Ferrous
Metal£¨Copper£©Exhibition
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