Tin Enters Bear Market on Demand Concern as Supplies SufficientAgnieszka de Sousa
Tin entered a bear market amid concern demand for the metal that’s used in electronics will slow amid ample supply.
Tin closed at $19,100 a metric ton on the London Metal Exchange today, 20 percent down from a closing high of $24,000 in October 2013 and meeting the common definition of a bear market. Tin, which settled at the lowest since July 2013, fell 15 percent this year and is the second-worst performing industrial metal on the LME.
Stockpiles monitored by the LME expanded 26 percent this year, the most since 2009. Societe Generale SA estimates supply will be about enough to meet demand this year and next, while Myanmar has emerged as a new source for China amid restricted output from top exporter Indonesia. Commodity prices touched a five-year low this month, partly on concern sluggish economic growth may compound surpluses of some raw materials.
“China has become more or less self-sufficient at a refined tin level,” Nicholas Snowdon, an analyst at Standard Chartered Plc in London, said by phone. The metal has also fallen this year because of “an impact of softening demand conditions.”
China is the biggest producer and consumer of the refined metal. Tin imports by the nation slumped 46 percent to 6,365 tons this year through October, according to customs data. China produced 152,357 tons of tin in the first 10 months, up 20 percent from a year earlier, according to Antaike.
Economic growth in the Asian nation is set to slow to 7 percent next year, the least since 1990, economists surveyed by Bloomberg estimate. Data showed Dec. 16 a preliminary Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics fell to a seven-month low of 49.5 in December, signaling contraction.
The LME Index of six main industrial metals fell 6.4 percent this year. The U.S. dollar has rallied to a five-year high after the Federal Reserve indicated it will raise interest rates next year as the economy strengthens, while growth slows elsewhere.
Soldering accounts for 55 percent of total tin demand while the chemical industry makes up 15 percent of usage, according to Societe Generale.
Indonesia, the second-biggest producer of tin, toughened rules last year to boost exports of higher-value products. New standards for packaging, labeling, size and shape of exports were implemented from Nov. 1 to further tighten controls. Smelters also curbed sales in an attempt to counter declining prices.
Copper closed at $6,315 a ton on the LME, the lowest since June 2010.