COLUMN- Shanghai bears send tin tumbling to three-year lows – by Andy Home (Reuters U.S. – July 8, 2019)

LONDON, July 8 (Reuters) – The tin market was last week rudely awakened from its previous range-trading slumber. On the London Metal Exchange (LME), three-month tin collapsed 7% over the course of Tuesday to $17,585 per tonne, the lowest print since August 2016.

It has since clawed its way back to a current $18,350 but looks susceptible to further selling by technical and momentum funds. The chart picture looks even worse in Shanghai, where the bear attack was sprung amid a build in short positioning and a spike in trading activity.

Such extreme moves are not unusual in the tiny tin market, where a bit of volume can push prices a long way. It’s tempting to explain the price collapse through a fundamental prism of rising LME stocks and Chinese exports but, as ever with the tin market, appearances can be highly deceptive.

Indeed, rumbling supply issues may yet bite the Shanghai bears. The Shanghai Futures Exchange tin contract is a relative newcomer, launched in the first quarter of 2015.

However, activity has been steadily building. Volumes last year were up by 32% and open interest by 10% on 2017 levels. And both indicators have just spiked again.

Market open interest at the end of last week was 45,580 contracts, the highest level since December 2018. Volumes mushroomed to 348,532 contracts, the third highest weekly total on record.

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