LIVE FUTURES REPORT 25/03: LME tin price rises 2.6%; others shrug off equity gains

The London Metal Exchange three-month tin price was the standout performer during morning trading on Wednesday March 25, while its peers were suppressed by a pessimistic market reaction to global financial stimulus announced to combat the economic effects of the novel coronavirus (nCoV 2019).

“It seems that the market has realized that huge stimulus packages to rebuild economies means just that, and thus they have to be broken first and broken economies don’t use much metal as they collapse,” Kingdom Futures chief executive officer Malcolm Freeman said in a morning note.

But tin futures bucked the trend, with the three-month contract gaining by 2.6% this morning to trade around $13,775 per tonne from the previous day’s close of $13,400 per tonne.

There is some sustained appetite in the tightly-held tin market, with some 75 tonnes of material leaving LME warehouses in Port Klang, Malaysia and Singapore this morning, with a further 40 tonnes freshly canceled in the US port of Baltimore at the same time.

Global LME tin stocks totaled 6,175 tonnes on Wednesday morning and have fallen by approximately 18.7% since hitting a year-to-date high of 7,595 tonnes on February 25.

But analysts take the view that while mining suspensions from Indonesia’s Timah and Peru’s Minsur have offered initial price support for tin, these gains will be capped to the upside by ongoing uncertainty.

The remainder of the LME three-month base metals prices were little changed in the morning session today, shrugging off the huge rally in the Dow Jones Industrial Average, which soared by 2,112.98 points or 11.37% on Tuesday - its biggest one-day rally since 1933.

Industry analysts suggest that while the Dow’s recovery on Tuesday may have provided some much-needed respite in a struggling market by clawing back losses made during the virus, a lack of liquidity in the complex could add to price volatility moving forward.

“We are entering the bottoming-out phase of the market cycle and that process will inevitably have several false starts,” Freeman added.

Other highlights

  • The US dollar index continues to trade in firm territory, trading down a marginal 0.47% this morning around 101.18 but still above 100.
  • Brent Crude Oil futures are once more above $30 per barrel, trading around $30.13 per barrel this morning.
  • United States crude oil inventories will be announced later on Wednesday, expected to rise to by 2.9 million barrels from the previous week’s 2-million-barrel increase.
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