Tin Market Update (June 7, 2012)

Tin prices continued to fall on the London Metal Exchange over the past week, with the cash price ending yesterday’s session at $19,330 US a tonne. Tin is now behind where it started the year, at $19,450. Before its current decline started it had risen as high as US$25,650 a tonne on February 8.

Tin has followed other base metals lower on concerns about the weak global economy, particularly the ongoing European sovereign debt crisis and a slowdown in China.

In addition, on Friday tin and a number of other base metals fell due to a troubling jobs report out of the US that showed that in May employers created the smallest number of new jobs (69,000) in a year. The country’s unemployment rate ticked up to 8.2 percent from 8.1 percent in April.

However, according to buyers and sellers on the ground, tin’s price drop seems to be almost entirely due to broader global headlines and not a decline in real demand.

“Our main business is automotive, electronics and solar,” one tin buyer recently told Reuters. “Demand is still strong. I use one container load per month [of tin] and that’s been steady this year.”

Over the longer term, that steady consumer demand is expected to continue to pull down inventories and drive up prices. For that reason, Stephen Briggs, a metals strategist at BNP Paribas, is forecasting a tin price of $25,000 per tonne in the second half of 2012, with prices moving upwards of $27,000 in the first half of 2013.