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Technical drivers
The LME tin price is stable so far on the morning of Monday December 23 after climbing by 0.5% last week. LME tin is back into a small backwardation ($5 per tonne) after being in contango of $41 per tonne at the end of last week. The renewed tightening at the front end of the curve could imply some short-covering. Tin's spec positioning is too light compared to the rest of the base meals. Stronger refined market conditions could produce a positive swing in spec sentiment, which in turn would push prices higher. Reflation seems to have re-emerged, caused by recent signs of stabilization in global manufacturing data and expectations for better economic conditions after the de-escalation of US-China trade dispute and the multiple rate cuts by major central banks this year. This could boost base metal demand, benefiting tin prices. The physical market remained weak because downstream buyers continued to destock ahead of the end of the year. A wave of restocking is likely in the first quarter of 2020. Supply/demand The World Bureau of Metal Statistics (WBMS) estimates that the refined tin market was balanced in the first 10 months of 2019. Over January-October 2019:
Fastmarkets analysts project a deficit of 5,000 tonnes this year and a deeper deficit of 7,000 tonnes in 2020. Conclusion We expect the rebound from late August to continue over the next months, reflecting our view that refined market conditions should tighten due to weaker refined production trends and stronger demand from the semiconductor sector. Into the end of the year, however, we do not expect much from tin prices because the downstream continues to destock. Trading positioning We do not have a hypothetical trading position for tin. All trades or trading strategies mentioned in the report are hypothetical, for illustration only and do not constitute trading recommendations.
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