One investor seems to be buying up most of the tin traded on the LME. Sparking unease among traders, several questions are doing the rounds - are the prices being pushed up artificially? Why the big position? Who benefits?
Commodities like tin, rubber and steel could be heading for a short-term rally in the near future bolstered by active buying interest from institutional and fund managers on most major world commodities, dealers said. Manufacturers worldwide were seen building up inventories to take advantage of the current weak US dollar, traders said. The weak greenback makes commodities attractive as a hedge against inflation.
The global tin market is expected to be in surplus by between 5,000 and 10,000 metric tons in 2009 as a result of the sharp dip in world consumption caused by the global economic slump since the fourth quarter of 2008.
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PT Timah declared that it may produce less tin than forecast this year if prices stay low.
Mr Abrun Abubakar corporate secretary of PT Timah stated:
We may produce within a range of 45,000 to 49,000 tonnes in 2009, reiterating an earlier forecast. Still, if prices remain low, we may cut production further.
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The Kuala Lumpur Tin Market has closed lower yesterday in line with the fall on the London Metal Exchange. At the close yesterday, the price of tin on the KLTM dropped by US$280 to US$12,220 per tonne while on the London Metal Exchange, it fell US$215 to US$12,395 per tonne.
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The Chinese might have raised their base metal purchasing across the board, but for domestic tin traders doing business in the U.S. market the metal continues to lag.
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The metals markets got a surge of heat with world leaders committing $1.1 trillion to combat global recession. Tin was up at $10,950 a tonne, its highest since March 11, from $10,450.
Three-month tin’s price performance has been underwhelming but maybe that’s because shorts simply can’t get out of their positions.
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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.
Even as stockpiling in China is set to raise the bar for the price of tin, miners in Peru may go on strike on March 15, which could bring on some pressure. Queensland Small Miners too have blamed the government for not adequately supporting small miners.
Wednesday, October 14, 2009
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