TIN TODAY – Stronger demand offsets supply response

Short Term:
Medium Term:
Long Term:
R1 22,000 2016 high (November)
R2 23,288 50.0% Fibo
R3 33,600 All-time high (April 2011)
20 20,980
100 19,777
50 20,651
S1 20,980 20 DMA
S2 20,651 50 DMA
S3 19,355 UTL (blue)
S4 13,140 2016 low

Technical Comment

Momentum is in positive territory while ADX is below 20, which could suggest a weak uptrend.


  • Tin seems to be capped on the upside but is supported by its stable 20 DMA, which is indicative of bright sentiment. A fresh 2016 high before the end of the year seems likely, in our view. Over the longer term, as long as prices remain above the UTL, the uptrend that started early this year will remain intact, we feel.

  • The monthly chart continues to paint a very bullish technical picture. But tin needs to move firmly above its 50% Fibo to trigger a new bull market (i.e. fresh all-time highs).

  • On the downside, we are watching the 20 DMA and the 50 DMA – a break below them could suggest a serious weakening in sentiment and ultimately push the metal lower toward the UTL. On the upside, tin’s next challenge is to take out its 2016 high and, if it can, break above the 50% Fibo on our monthly chart, which could trigger a new bull market.

Macro drivers

LME tin is a little stronger so far this week but seems to lack upside conviction despite a firm increase in global risk sentiment (e.g. US equities are surging to record highs), a fall in the dollar and solid Chinese data yesterday and today. We think prices are capped on the upside because of a supply response to current attractive price levels.

Looking at the forward spreads, forward selling (hedging activity) seems to be picking up. The 3m-15m spread has averaged a backwardation of $544 per tonne so far in December compared with $260 in November. This explains why prices have been capped over the past month.

But supply in Indonesia has remained tight so far this year. According to ITRI, Indoenesian exports dropped 18% year-on-year in January-November 2016. But we would not be surprised by a pick-up in Indonesian shipments in the coming months because smelters may take advantage of higher prices.

On the brighter side, demand seems to have improved in recent months. According to the WSTS, global semiconductor sales rose 3.4% month-on-month in October after rising 4.2% in September and 3.5% month-on-month in August. The WSTS also revised its forecasts upwardly. It now expects global sales of semiconductors to be broadly flat (-0.1%) in 2016 and to rise 3.3% in 2017 and 2.3% in 2018.

Flows in visible inventories (LME & SHFE):

Visible inventories have picked up on net since November, which could explain tin’s lack of upside conviction.

LME stocks – at 3,375 tonnes as of December 13 – are up 190 tonnes or 6% since the start of December after rising 290 tonnes or 10% in November and falling 615 tonnes or 18% in October. In the year to date, stocks are down 2,765 tonnes or 45%.

SHFE stocks – at 1,702 tonnes as of December 9 – are down 205 tonnes or 11% since the start of December after being flat in November and falling 817 tonnes or 30% in October. In the year to date, though, stocks remain up 929 tonnes or 120%.

Supply/demand balance:

The deficit in the global refined market was 20,500 tonnes in January-August. This confirms that the fundamental outlook in the global refined tin market continues to improve.


We maintain our constructive stance on tin over the very short term (around one month) because we think that any short-term price weakness will attract buying on the dips. Still, we would be forced to turn neutral in case of a firm break below the 50 DMA, which has proved to be reliable support in recent months.

We remain positive over the short and medium terms – although a supply-side response is likely, stronger global macro dynamics, especially in China, may translate into firmer demand for tin. As well, visible inventories remain so low that any renewed tightening in the supply/demand balance would provoke a strong price reaction, we think.

We think the balance of risks to our forecast made at the end of the third quarter for a year-end target at $21,000 per tonne is tilted to the upside in this environment.

See our October spotlight for more information.

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