Reading some material today, happened on this...Re Tin -
Tin News • Dec 8th: Mediators urged eastern Congo rebels and the government to compromise at the first face-to-face talks, staged in Kenya, to defuse tensions that have threatened to escalate into a new regional war. However, neither the DRC President, Joseph Kabila, nor General Laurent Nkunda, leader of the rebel National Congress for the Defence of the People (CNDP), attended the meeting. • Dec 5th: Tin exports from Indonesia’s Bangka-Belitung island are estimated to have fallen 47% in November from a year ago, as small smelters were shut due to sliding prices. The governor of the island said small tin smelters could resume operations ahead of a central government decision on issuing a quota on production. • Dec 3rd: Venezuela agreed to acquire 300t of Bolivian tin and is considering buying more, Bolivia’s mining minister said. Analysis • A shot in the arm Tin is currently trading in a fashion that clearly demonstrates its superior shortterm fundamentals over all other base metals, which have all suffered substantial losses. The shot in the arm can be put down to a quick supply-side response by the big two, China and Indonesia, and by a resurgence of serious fighting in the Democratic Republic of the Congo’s tin ore (cassiterite) producing eastern North Kivu Province. These factors have seen tin fall just 37% since mid-September, which is a small miracle when compared with the other base metals. The price spiked briefly to almost $12,500/t in early December on news that China’s Yunnan Province would begin to augment its stocks of all metals, including tin. This was capped by more leaks that Guangxi Province and China’s secretive State Reserves Bureau were also on the lookout to build stocks of all metals to help small smelter businesses cope with the downturn. In the case of Yunnan, however, the plan would first need approval from the state government and would probably involve a much smaller headline number than the reported $3bn. More significantly, the proposal by the governor of Indonesia’s Bangka-Belitung island to lower export quotas was a very supportive comment, despite adding that small smelters would be allowed to restart. The governor’s said that he would recommend that Indonesia lower quotas in 2009 to 60,000t-75,000t from 90,000t this year, which could lose the market up to 30,000t of tin. This would be in additional to cuts already made in China and to other supply disruptions in the DRC and by small-scale producers in Tasmania. Outlook In our opinion, tin remains the strongest metal fundamentally in the shortterm and we expect it to show a deficit this year and next of 20,000t and 10,000t, respectively. Interestingly, for the past 15 months China has been a net importer of tin, suggesting demand still remains steady there for now. Negatively impacting the price is the trickle in of metal to LME stocks. Short-term LME 3-month price: $11,000/t-$12,000/t.
BIG Price at posting:
2.4¢ Sentiment: LT Buy Disclosure: Held
