Tin’s pull-back continues as bullish outlook faces reality check

Tin starts the week lower than it ended last week, as price hovers just slightly above $33,000. Current price action comes after a period that has seen the industrial metal tower towards near two-year highs - becoming the strongest year-to-date base metals performer.

Analysts have made the case for a further upside with factors like supply disruptions, geopolitical conflicts, fund inflows, and changes in demand, all touted to play a role. Tin’s 32% surge since the start of the year has been largely attributed to, a growing demand against faltering supply narrative.

However, global stockpiles are raising doubts about the actual strength of demand. In Shanghai, stocks have hit record highs, signalling a surplus of tin. While this could be due to changing trade patterns or a shift from off-market storage, it nonetheless points to ample supply. Meanwhile, LME stocks, though down from the start of the year, have stabilized, and indicators suggest good metal availability.

Though tin's supply challenges haven't disappeared, Indonesian exports remain below historical averages and the Myanmar mine closure persists—the market has surprisingly absorbed these disruptions and even seen inventories grow. This resilience suggests a weaker demand landscape than expected. Global tin usage fell in 2022 and was projected to decline further in 2023. Even the recent recovery in semiconductor sales, a key indicator of tin usage, is showing signs of slowing down.

The combination of supply issues and rising inventories points to a more prolonged demand weakness than initially anticipated. The market's ability to absorb supply disruptions and the growing stockpiles are casting a shadow over tin's bullish outlook. This disconnect between expectations and reality could lead to increased price volatility in the coming months as the market grapples with the conflicting signals. Analysts and traders will be checking to see
whether demand can catch up with supply or if the growing inventories will ultimately weigh on prices.

At the time of writing, Tin is hovering just above the $33,000 mark with a further slide towards the $32,500 mark possible. Sellers could find support at the $32,440, an area bulls have defended before.

On the upside, bulls could face resistance around the $33,640 level, an area bulls have needed a lot of momentum to breach through. A decisive move past that price point could see bulls resume the uptrend and test the 34,250 level.