Tin affected by global downturns
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By Melissa Pistilli-Exlusive to Tin Investing News
Tin Affected By Global Downturns
Tin prices have dropped to their lowest level in over a year as the global financial crisis continues to cause concern that economic slowdowns worldwide will substantially decrease the demand for raw materials.
Early Monday, tin prices fell 4.6% or $650 to $13,400/tonne on the London Metal Exchange (LME) to extend last week’s 17% decline.
Tin was the best performing metal on the LME this year, but has now dropped 41% from its record high of $25,500/tonne reached in May. Up until last week, the metal was up for the year due in part to decreasing supply from the world’s two largest producers, China and Indonesia.
Although tin was down early on Monday, the metal moved up overnight on the LME to $14,800/tonne as investors seemed to gain more confidence in the base metals sector with Monday’s record stock market gains.
Tuesday, the base metals including tin were on a strong rally as investor confidence continued in Asian and European equity markets. However, analysts are warning that the current metals rally isn’t necessarily an indication that the global economic crisis is nearing an end.
While the fundamentals for tin and other base metals remain strong, Global Insight metals analyst John Mothersole feels base metals such as tin, copper and cobalt have more potential downside.
The base metals are on the rise this week because “people are buying back (the metal complex) after base metals (complex) was oversold last week,” said Michael Khosrowpour, a broker at Triland Metals.
The major factor in the sell-off of commodities these last few months has come from hedge funds pulling out of the sector. As hedge funds invested heavily in the commodities markets continue to liquidate their holdings, the base metals sector will remain somewhat volatile.
If the current global financial crisis continues to worsen, it could result in much harsher downward pressure on global economic growth and negatively affect hedge fund assets and commodity indices. Some of the world’s most prominent hedge funds have already suffered enormous losses this year. The most notable example is Ospraie Management LP, which had to close it largest fund after taking short positions on commodities futures and longs on resource equities.
Indonesia: World’s largest tin exporter
Indonesia had to suspend trading on its stock exchange for a few days late last week after the ISE index had its biggest three-day drop in 20 years on October 8. The Jakarta Composite Index suffered the most extreme drop in Asia, losing 21 per cent across three days.
According to Mineral, Coal and Geothermal director general Bambang Setiawan, the world’s largest tin exporter may produce less refined tin this year than previously forecasted. In reaction, the Indonesian government has discontinued the maximum 100 tonnes per year restriction on tin exports, which it considers unnecessary, in light of declining tin exports and decreasing demand.
The original intention of the export restriction was to maintain the price of tin. Indonesia supplies 30-50 per cent of the world tin requirement, but Bambang feels that the current global economic situation will result in less tin exports from Indonesia.<–>
Tags: base metals, china, commodities, exports, global economic crisis, global financial crisis, hedge funds, indonesia, investing news, investor, jakarta, lme, london metal exchange, raw materials, stocks, tin, tin investing, tin prices
November 4th, 2008 at 11:10 pm
Kindly find a buyer of copper, cobalt at 78.6% per tonne