LONDON, Feb 13 (Reuters) – You might think the tin market is on a bull charge. Three-month tin on the London Metal Exchange (LME) recorded a high of $22,000 per tonne on Jan. 29, a level last seen in November 2016.
The soldering metal has since retreated to $21,430 but is still the strongest year-to-date performer among the LME base metals pack, with gains of almost 7 percent. LME stocks are very low (again) and time-spreads are very tight (again).
Appearances, however, are deceptive in this particular market. Viewed through a wider lens, tin has actually been a chronic underperformer since the start of 2017 with a net gain of just 2 percent. Lead, the next “weakest” LME performer over the same timeframe, is up 25 percent.
And those signs of supply stress say as much about the London contract as they do about the broader market. Indeed, tin supply surprised on the upside last year, production from the world’s top 10 producers rising 5 percent, according to the International Tin Association (ITA).
Unless that rate of growth starts slowing, tin is going to struggle to close the pricing gap with the rest of the LME complex. Since the start of January, LME tin stocks have fallen by 310 tonnes, or 14 percent. They stand at 1,925 tonnes, equivalent to a minimal two days of global usage.