LONDON – The London Metal Exchange (LME) is running short of tin. Headline stocks of the soldering metal in the LME’s warehouse system fell to 2,290 tonnes this week.
It’s the lowest level in at least 20 years but in truth any historical comparison is lost in the mists of time because the world of metals trading and the LME’s place in that world were so different back then. Unsurprisingly, low inventory is once again generating tightness across short-dated time-spreads, extending a pattern that has been running for a couple of years now.
But the outright price is underperforming. Tin, currently trading just shy of $20,000 per tonne, is down more than 5 percent on the start of the year and vying with nickel for worst performer among the major LME metals. Which begs the question of whether the LME is reflecting the wider state of the market or its own dwindling liquidity.
There is, for example, now more tin sitting in warehouses operated by the Shanghai Futures Exchange (ShFE) than in the LME system.The LME tin contract spent much of last year in backwardation, cash metal commanding a scarcity premium over forward dated prices.
After a brief respite in the first quarter of this year, when LME stocks rebuilt to 5,995 tonnes in mid-February, tightness has returned. The benchmark cash-to-three-months LME spread was valued at $71 per tonne backwardation at the Thursday close.
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