Tin prices surged the most in three years as signs of declining supplies spurred buying to close out bearish bets.
Stockpiles tracked by the London Metal Exchange fell to the lowest since October, and Indonesia’s largest private smelter, Refined Bangka Tin, will halt production this week. The recent combination of rising open interest and price declines suggest traders added short positions, according to ICBC Standard Bank Plc.
Tin is the worst performer on the LME this year, and fell into a bear market in December amid surging inventories and the outlook for increased supply from Myanmar. ITRI Ltd., the St. Albans, England-based, producer-funded industry group, said this week that improving China demand will help spur price gains in the second half of this year.
“The drop in stockpiles is price-supportive,” Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said in a telephone interview. “Also, some buyers are returning after the huge drop in prices.”
Tin for delivery in three months climbed 6.7 percent to settle at $15,525 a metric ton at 5:51 p.m. on the LME, the biggest jump since January 2012.
Prices have slumped 20 percent this year. Open interest, or the number of contracts outstanding, rose 8.3 percent in two days through April 17, according to LME data.
Inventories monitored by the LME fell 2.4 percent to 9,425 tons on Tuesday.
“The pressure on some of those shorts to cover back must already be mounting,” Leon Westgate, an analyst at ICBC Standard Bank Plc in London, said in a report on April 20. “The market has also ignored the repeated announcements from Indonesian producers that they will cut production.”
Prices may reach $18,000 in the second half, ITRI said on Monday. Indonesia is the world’s largest exporter of the metal, according to the group.
In London, copper declined 0.6 percent to $5,945 a ton ($2.70 a pound). Nickel fell, while zinc, aluminum and lead rose.
On the Comex in New York, copper futures for July delivery fell 0.9 percent to $2.7055 a pound.