It couldn’t have come at a better time. Sentiment on the LME metals complex is still trapped between the conflicting signals coming from East and West, resulting in choppy, consolidatory price action. However, downside momentum has stalled across the board with predators now looking for “relative value” plays.
Tin and lead are still the metals with the best recovery potential since neither is burdened with the same sort of inventory build that has mired the fortunes of aluminum and nickel. Tin, the minnow of the LME complex, is still being subjected to a front-month squeeze with the cash-to-three-month period still trading in consistent backwardation.
Recovery, though, is not here yet, analysts state, and further price strength will only come from what looks set to be a war of attrition between the bulls and bears. Moreover, any resumption of bad news flow from either the banking or the automotive sector can be expected to bury the positive signals coming from China and send fledgling bulls scurrying back for cover.
However, recession has boosted demand for tin cans. According to a Reuters report, tin can makers are paying about 50 per cent more this year for tinplate, used to make cans, despite falling commodity prices as demand for canned food rises due to the recession, Crown Food Europe said on Monday. Crown Food Europe is part of U.S.-based Crown Holdings, the world’s largest producer of food and aerosol cans and the third-largest producer of beverage cans.
Tin cans are made from tinplate – essentially flat-rolled steel covered with a layer of tin – and prices have risen despite the slump in commodity prices. “Historically, times of economic recession have tended to increase sales of canned food, as consumers curb their ‘out of home’ eating activity,” Olivier Aubry, a vice president at Crown Food Europe, told Reuters.
Tinplate is made by companies including the world’s top steel maker ArcelorMittal (AMS:MT) ThyssenKrupp’s RasselStein and Tata Steel’s (BOM:500470) Corus. A Corus spokesman said the company raised tinplate prices by 40 to 50 per cent this January, partly because of rising demand.
Incidentally, prices of hot-rolled coil, one of the most widely used forms of flat steel, have nearly halved to between $475 and $580 a tonne since the middle of last year in Germany, China, Japan and the United States. The tin price on the London Metal Exchange, has fallen about 60 per cent to around $10,450 a tonne since last May.
Silver Standard Resources Inc. (TSE:SSO) has reported that its wholly-owned Pirquitas Mine in Jujuy, Argentina, is on schedule to commence concentrate production in the current quarter. Initial production will focus on the processing of over 400,000 tonnes of run-of-mine grade jig tails from historic operations and then transition to material from the open pit.
To date, approximately five million tonnes of material has been moved from the Pirquitas open pit and stockpiling of ore has commenced. At current metal prices, the silver and tin concentrates account for over 95 per cent of the anticipated revenue from the mine.
As a result, the silver circuit will be optimized first, followed by the tin circuit. A decision to complete the zinc circuit is dependent on the results of metallurgical test work to be received on increasing silver recoveries. Process equipment purchased for the zinc circuit may be better served increasing the silver recovery.