Price Indicator

Tin Focus:

1. The Fed's interest rate cut
2. LME tin stocks

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Market Review

ICDX tin rose by 0.99% compared to the previous week, supported by various factors such as the performance of the USD currency on the issue of the Fed's interest rate cut and also related to the weakening of tin stocks on the London Metal Exchange (LME) related to the turmoil of the Middle East conflict.

Fed President Cleveland Mester said last Tuesday that if the data is supportive the June policy meeting might be a good time to start easing policy. “If the economy develops as expected, inflation continues to move back toward 2 percent, and the labor market and economic growth remain solid, then I believe it would be appropriate to begin lowering the federal funds rate later this year,” Mester said. In a similar vein, Federal Reserve (Fed) Governor Adriana Kugler said on Wednesday (3/4) that she believes inflation will slow gradually this year and pave the way for the Fed to cut interest rates. Furthermore, Fed Chair Jerome Powell reiterated that policy interest rates will likely peak in the current cycle.This will trigger a decline in the USD currency and make tin prices cheaper and trigger demand growth.

From China's side as the world's largest tin consumer, Zheng Zhajie, director of the China National Development and Reform Commission, held a special symposium last Tuesday (2/4) to communicate with private companies regarding the increase in large-scale equipment and consumer goods trade, which has an impact strong increase in tin prices at the macro level in the private sector. Basically, most smelting enterprises in Yunnan and Jiangxi maintain stable production.

On the stock side, at the opening of trading this week Monday (2/4), LME tin stocks were 4,585 and at the close of trading Friday (5/4) stocks were running low at 4,365. This historical data shows a strong response in tin prices when LME inventories decline. Coupled with frequent concerns about supply disruptions, especially due to the Israel-Hamas conflict. In the news circulating, geopolitical tensions are increasing, especially after Israel attacked the Iranian embassy in Syria. Israeli embassies around the world have been put on alert due to the increasing threat of Iranian attacks on Israeli diplomats. Iran, the third-largest producer in OPEC, has vowed revenge against Israel for an attack on Monday that killed high-ranking Iranian military personnel. Israel has not claimed responsibility for the attack on Iran's embassy compound in Syria. In addition, reports of increased threats to the Israeli embassy in the United States (US) by Iran have added to market concerns.

Market View

Threat of Supply Disruption Threatens Tin Prices in the Future

Activity Tin exports from Indonesia, as one of the world's tin exporters, still have not received any good news due to delays in mining company operations which caused a halt in production activities and triggered a halt in exports at the beginning of last year. Further supply disruptions also stem from Myanmar is the world's third largest tin producing country and this is still the case today.

In the midst of the threat of a shortage of tin supply, positive signals can help boost tin prices, namely related to optimistic data on factory activity in China, thereby supporting tin prices. Manufacturing PMI increased from 49.1 to 50.8, and Non-Manufacturing PMI rose from 51.4 to 53.0. However, the Caixin Manufacturing PMI traditionally has a greater impact on market risk sentiment. Caixin Manufacturing PMI increased from 50.9 to 51.1 in March. Economists had expected a rise to 51.0.

Weekly Economics Data and Event

SOURCE: ICDX RESEARCH