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.

Macro drivers
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.

Exchange inventories

• LME tin stocks, at 1,295 tonnes as of March 7, are down 30 tonnes or 2% so far in March (including a fall of 75 tonnes so far this week) after they dropped 520 tonnes/28% in February and 320 tonnes/15% in January. While they were little changed over the whole of 2018, they dropped 690 tonnes in the final quarter.
• SHFE tin stocks, at 8,580 tonnes as of March 8, are down 80 tonnes so far this March after they rose 543 tonnes in February and dropped marginally by 154 tonnes/1% in January. They soared by 3,356 tonnes in 2018, rising by 1,810 tonnes/28% in the fourth quarter alone.

 Supply/demand



The World Bureau of Metal Statistics (WBMS) pegged the global refined tin market in a deficit of 12,400 tonnes in 2018 after a deficit of 17,000 tonnes in 2017. Globally, mine production expanded by 19%, refined output increased around 1% and refined consumption was essentially flat.

We think the WBMS is overstating the deficit of the global refined tin market in 2018. We peg the deficit at 7,000 tonnes for the whole of 2018, reflecting a 2.4% increase in refined production and a 1.5% increase in consumption, all on a yearly basis.



Conclusion
We think that tin is vulnerable to some profit-taking in the very near term because tightness in refined tin market conditions are due to ease after the resumption of Indonesian tin exports.

Trading positioning
We do not have a hypothetical trading position for tin.