Short term: The LME three-month tin price has come under slight downward pressure since hitting a high of $21,800 per tonne last week. The trading momentum is negative but the technical picture remains healthy while prices remain above their 20 DMA. The price could move higher in the very near term. The main resistance is at $22,000 per tonne, which corresponds with last year's high.
Long term: In the monthly chart, the bullish crossover pattern - where the 20 MMA is above the 50 MMA - points to firmer prices in the months ahead. Last month, LME tin closed above the 20 MMA, which would suggest an uptrend over the coming months. The next major resistance level would be at $22,000 per tonne, but we caution that a triple top could be in formation at $22,000 per tonne.
LME tin has come under modest downward pressure in recent days. But the weakness is micro- rather than macro-driven, in our view.
At the micro level, the Indonesia Commodities & Derivatives Exchange (ICDX) halted on Monday March 4 the suspension of key smelter inspector PT Surveyor Indonesia in connection with the launch of its new physical tin contract. The suspension of PT Surveyor in mid-October 2018 resulted in severe supply disruptions, producing a sharp rise in European physical premiums and a rally in tin prices.
Private Indonesian tin smelters are due to resume their tin export business, which will ease tight conditions in the refined market in Europe and will probably trigger an unwinding of speculative long positions on the LME.
The tightness in LME nearby spreads seems to have already eased - the cash/three month spread is at $46 per tonne backwardation compared with $110 per tonne backwardation on February 25.
Today, investors will pay close attention to the US jobs report.
All trades or trading strategies mentioned in the report are hypothetical, for illustration only and do not constitute trading recommendations.