LME MORNING - Tin shatters records for fifth consecutive day

By: Barbara Stcherbatcheff

London 28/01/2011 - Base metals firmed across the board on the LME on Friday, as traders rode a wave of bullish sentiment derived from expectations that the fundamentals of the complex will tighten over the course of this year.

The price of tin soared to a fresh all-time high at $29,700 per tonne, with the metal pushing to new highs each day of this week as positive technical signals and concerns about supply from Indonesia underpinned prices.

“The success of tin this week may also be attributed to an increase of movement out of other metals,” John Meyer, analyst at Fairfax, said on Friday.

Three-month LME copper traded as high as $9,593 per tonne, just under $200 shy of its all-time high of $9,781 per tonne reached earlier this month.

Still, amongst all the base metals, only nickel and tin have made gains thus far this month, with copper, aluminium, lead and zinc all in negative territory.

The weaker dollar also boosted metals prices on Friday, trading at two-month lows of 1.3730 against the euro, on the heels of comments from Eurozone policymakers that reaffirmed a commitment to tackling inflationary pressures.

In December, German import prices rose at the fastest annual pace in 29 years, while euro zone inflation shattered the ECB’s two percent target for the first time in over two years. 

Next week, inventory movements may well dictate the trend in the absence of the SHFE market, as stocks have been growing consistently on the LME, reflecting the absence of Chinese offtake.

The Shanghai Futures Exchange will temporarily raise trading margins and intraday limits for all contracts around the Lunar New Year from February 2 - 8, in order to reduce trading risk.   

Today’s economic calendar brings US GDP figues at 13:30 GMT, with economists expecting growth of 3.7 percent in the fourth quarter of 2010, while the Michigan Sentiment index will be released at 14:55.


Tin traded at $29,600, just $100 lower than its all-time high hit earlier in the session. The metal has hit fresh records every day this week on the heels of persistent worries over availability.

As the least liquid metal of the major six industrials, tin is famous for surprising traders with sharp price moves on the back of a surge in volumes or limited supply availability.

In November 2009, a UK-based commodity hedge fund controlled almost 90 percent of London Metal Exchange tin stocks and cash contracts. However, physical tightness did not play a part in this week's price rally, as the premium for cash metal fell to $45 from $60.

Copper traded at $9,579, up $138, while stocks climbed for the sixth day in a row to 398,075 tonnes, the highest since September 2, 2010.

Copper prices could hit a ceiling next week on the back of rising inventories along with the Chinese New Year holidays.  But construction company Caterpillar forecast copper prices to continue to rise this year to new highs as the global economy gains traction, according to broker Fairfax.

Aluminium traded at $2,457, up $30, while nickel traded at $26,700. 

In news, Vale has reached a tentative agreement for a new contract at Voisey’s Bay’s operations in Labrador where strike action has been underway since August 1, 2009, according to broker Fairfax. In 2008 the operation produced 77,000 tonnes of nickel and strike action has restricted output.

Zinc traded at $2,301, up $41, while lead traded at $2,454, up $34.  Lead stocks were at 710,925 tonnes, the highest since April 27, 1995.

Steel billet was indicated lower at $540/565.  In the minors, cobalt was indicated at $38,000/40,000 while molybdenum was indicated at $38,000//39,000.

(Editing by Martin Hayes)