Surprise price dive sees tin drop 7% through technical support to 3-yr low

Tin futures prices came down by more than $1,200 per tonne in afternoon trading in London on Tuesday July 2, in what traders and analysts described as a technically-led retreat for the metal.

At $17,600 per tonne, the London Metal Exchange’s benchmark 3-month tin futures contract was down by 7.1% or $1,355 per tonne against the previous day’s close.

“[A price of] $17,500 [per tonne] is the next psychological support - that’s where we will see some relief buying,” Fastmarkets analyst Andy Farida said. “Today has been pretty crazy. At the moment, things are unsettled [and] there’s a lot of panic selling.”

The fall, which was the largest daily drop in price since May 29, 2008, began at 14:00 hrs UK time and was largely technically driven, market sources said. Trade volumes trickled around 300 lots until the afternoon business started, when the volume ballooned to 1,230 lots, the most since June 2017.

“It’s technical stop-loss selling, first through $18,500 [per tonne] then $18,200, then more stops through $18,000,” said an LME trader who declined to be named, because they are not permitted to talk to the press.

Sloppy fundamentals
Disappointing purchasing managers’ index (PMI) manufacturing numbers led commodity prices, including for base metals, down across the board on Tuesday. The price of crude oil was down by 2.88% to $63.32 per barrel.

Tin prices were leading the pack downward, despite the World Burueau of Metals Statistics recording a deficit for the metal. Data released by the Semiconductor Industry Association on July 1 estimated that global sales of the material were down by 14.6% in May 2019 compared with the corresponding month last year, indicating that demand was weak.

Tin is widely used as solder, and demand is closely linked to microchip production.

Meanwhile, LME tin stock levels were up fourfold since the beginning of May, with deliveries at Baltimore, Port Klang and Singapore.

“I can’t think of much that is positive to say from a fundamental perspective at the moment,” a second trade source said. “Stocks went up on the LME, and in China, but I get the sense that it’s weak over there.”

Hassan Butt in London contributed to this report.
 

Archie Hunter

archie.hunter@fastmarkets.com

Published

Archie Hunter

July 02, 2019

16:30 GMT

London