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Signals of China's economic slowdown, tin is also under pressure
Signals of China's economic slowdown, tin is also under pressure
Wednesday, 14 February 2024

Price Indicator

Product 

Price

% change

ICDX

$25,610

-2.48%

LME

25,980

4.84%

KLTM

NA

-

SHFE

217430

3.39%

USD/IDR

15629

-0.45%

Focus of Tin:

  1. China's economy is expected to slow down
  2. Geopolitics and the Fed's interest rates

Market Review

ICDX tin prices weakened-2.48% compared to the previous week due to signals that China's economy is slowing down and triggering concerns will have an impact on global economic recovery as well as affect demand for tin and make tin's performance weaken.

China's services activity growth was slightly slower in January due to a decline in new orders, the latest data from S&P Global showed. Data Index The Caixin PMI index fell slightly to 52.7 from 52.9 in December, but remained above the 50 mark that separates expansion and contraction for 13 consecutive months. The index indicates that the world's number two economy is still sluggish amid weak demand and a property slump, especially following official data last week which showed factory activity contracting again.

Still related to China, in a report released last weekend, the International Monetary Fund (IMF) estimates that China's economic growth will slow to 4.6% in 2024 and continue to decline in the medium term to around 3.5% in 2028. The IMF noted China's prospects are highly uncertain given large imbalances such as overinvestment in infrastructure and housing. Additionally, worse-than-expected external demand and geopolitical tensions pose risks to China's economy, the IMF added.


Geopolitical Conflicts That Are Still Ongoing Until The Fed Will Influence Tin's Future Performance

It is feared that the ongoing conflict will create tensions in the demand and supply of commodities including tin.KMiddle East geopolitical tensions continue after Israel rejected a ceasefire offer from Hamas.In circulating news, Israeli troops bombed the southern border town of Rafah on Thursday after Prime Minister Benjamin Netanyahu rejected a proposal to end the war in the Palestinian enclave and release hostages held in the Gaza strip. On the other hand, United States Secretary of State Antony Blinken has hinted at the possibility of further negotiations to reach a resolution. Additionally, a delegation from Hamas, led by senior official Khalil Al-Hayya, will leave for Cairo on Thursday for talks with Egypt and Qatar aimed at reaching a ceasefire agreement.

On the US side, the release of hotter-than-expected US inflation data prompted market players to reduce bets on an early Federal Reserve interest rate cut, thereby strengthening the price of the US Dollar, making the price of tin more expensive due to tin trading transactions using the US Dollar currency. The United States (US) headline Consumer Price Index (CPI) came in at 3.1%, topping forecasts of 2.9% but slightly lower than the previous reading of 3.4%. Additionally, month-on-month inflation rose 0.3%, against expectations to maintain the previous figure of 0.2%. US Core CPI (YoY) was unchanged at 3.9%, contrary to market expectations for a decline to 3.7% in January. Additionally, US Core Inflation (MoM) increased 0.4%, beating expectations of unchanged 0.3% for January. US inflation is still hot, making market players increasingly pessimistic if the US central bank, The Federal Reserve (The Fed), will soon cut interest rates.

Weekly Economics Data and Event

Date

Data / Events

Actual

Expectation

Previous

5-Feb

USD - Fed Chair Powell Speaks

-

-

-

5-Feb

USD - ISM Services PMI

53.4

52

52.6

8-Feb

CNY - CPI y/y

-0.8%

-0.5%

-0.3%

8-Feb

CNY - PPI y/y

-2.5%

-2.6%

-2.7%

8-Feb

USD - Unemployment Claims

218K

221K

227K

SOURCE: ICDX RESEARCH
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© Indonesia Commodity & Derivatives Exchange (ICDX)
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