TIN TODAY: Quiet; falling available stocks suggests more tightness

Short Term:
Medium Term:
Long Term:
Resistances:
R1 20,380 Nearby resistance
R2 20,585 Mar 2017 peak
R3 20,748 DTL
R4 21,130-21,500
Support:
S1 20,084 20 DMA
S2 19,860
S3 19,850 UTL
S4 19,340 Mar 27 spike low
Stochastics:Bullish, but crosses lower
Legend:

DMA – daily moving average

DTL – downtrend line

UTL – uptrend line

Technical Comment

Analysis

  • Tin’s January-February sell-off appears to have put in a ‘W’-shaped bottom. Prices initially rebounded robustly but trading has become more erratic, with some large swings seen. 
  • Prices are edging higher again with the rising 20 DMA underpinning the rally.
  • Former support starts at $20,680 per tonne – the bottom of the December sideways trade. The DTL from that sideways range is at $20,748 per tonne – clearance of that level would then start to challenge overhead supply seen between November and mid-January. 
  • The stochastics have crossed negatively, so that may put the brakes on the advance for a while. 

Macro issues

LME stocks are trending lower again, dropping to 3,475 tonnes as of Tuesday April 4. The multi-year low on stocks was 2,895 tonnes in October 2016. Available stocks are falling too; they have fallen to 2,665 tonnes.

185 tonnes of warrants were cancelled yesterday, 75 were canncelled the day before and 250 tonnes the day before that.

The cash/three-month spread is wider at $33-53 per tonne backwardation, compared with $28-48b yesterday. The forwards have also widened with with 3/15-month spread at $230b, compared with an average last week of $195b. 

Conclusion

We remain quietly bullish for tin prices, because: 1) LME stocks are getting low again; 2) when the spread tightened, it did not attract new metal into warehouse; and 3) the chart seems to have put in another base and prices are looking well placed to challenge $20,500 per tonne and above again. We wait to see how much selling there still is around the $20,500 per tonne level.

All trades or trading strategies mentioned in the report are hypothetical, for illustration only and do not constitute trading recommendations.
Kathleen Retourne

About Kathleen Retourne

Kathleen has been reporting on commodity markets since 2006. She joined FastMarkets in 2011 and has immersed herself into the metal industry, specialising in LME coverage. Follow her on twitter @kathretourne