TIN TODAY: Quiet; falling available stocks suggests more tightness

Short Term:
Medium Term:
Long Term:
Resistances:
R1 20,380 Nearby resistance
R2 20,585 Mar 2017 peak
R3 20,748 DTL
R4 21,130-21,500
Support:
S1 20,084 20 DMA
S2 19,860
S3 19,850 UTL
S4 19,340 Mar 27 spike low
Stochastics:Bullish, but crosses lower
Legend:

DMA – daily moving average

DTL – downtrend line

UTL – uptrend line

Technical Comment

Analysis

  • Tin’s January-February sell-off appears to have put in a ‘W’-shaped bottom. Prices initially rebounded robustly but trading has become more erratic, with some large swings seen. 
  • Prices are edging higher again with the rising 20 DMA underpinning the rally.
  • Former support starts at $20,680 per tonne – the bottom of the December sideways trade. The DTL from that sideways range is at $20,748 per tonne – clearance of that level would then start to challenge overhead supply seen between November and mid-January. 
  • The stochastics have crossed negatively, so that may put the brakes on the advance for a while. 

Macro issues

LME stocks are trending lower again, dropping to 3,475 tonnes as of Tuesday April 4. The multi-year low on stocks was 2,895 tonnes in October 2016. Available stocks are falling too; they have fallen to 2,665 tonnes.

185 tonnes of warrants were cancelled yesterday, 75 were canncelled the day before and 250 tonnes the day before that.

The cash/three-month spread is wider at $33-53 per tonne backwardation, compared with $28-48b yesterday. The forwards have also widened with with 3/15-month spread at $230b, compared with an average last week of $195b. 

Conclusion

We remain quietly bullish for tin prices, because: 1) LME stocks are getting low again; 2) when the spread tightened, it did not attract new metal into warehouse; and 3) the chart seems to have put in another base and prices are looking well placed to challenge $20,500 per tonne and above again. We wait to see how much selling there still is around the $20,500 per tonne level.

All trades or trading strategies mentioned in the report are hypothetical, for illustration only and do not constitute trading recommendations.