LONDON (Reuters) – Tightness has returned to the London Metal Exchange (LME) tin contract. Stocks are low and falling. Time-spreads have moved back to backwardation.
This is, to some extent, business as usual for the London tin market, a low-liquidity contract where brokers sometimes struggle to match lending and borrowing flows.
But it’s still a surprising outcome given a macro backdrop of sliding manufacturing activity around the world as COVID-19 takes its toll on economic as well as human health.
Tin’s contrarian behaviour is down to the severity of the supply-chain hit caused by the coronavirus as lockdowns forced the suspension of some of the world’s largest producers.
The resulting supply gaps have led to a run on exchange stocks, both in London and in Shanghai. However, key mines and smelters are now gradually coming back into production, putting the spotlight back on the state of demand.