Tin prices slipped to their lowest in more than four months on Thursday despite forecasts of deficits, while copper pulled back after touching a new peak. At the start of the year, most analysts tipped tin for price gains as supply was expected to fall short of demand.
"Indonesia is not even exporting all that it is producing, so that should make the deficit even bigger," metals strategist Stephen Briggs at BNP Paribas in London said. "Yet that clearly is not showing up in price performance or the trend in LME stocks." That could be because China may be exporting refined tin from stockpiles or demand was falling short, he added.
Three-month tin on the London Metal Exchange fell to a low of $22,311 a tonne, the weakest since February 12, before closing at $22,425 from $22,500 at the close on Wednesday. LME tin stocks on Thursday rose by 85 tonnes to 11,185 tonnes, up nearly 40 percent over the past four months.
LME copper climbed to a session high of $6,954 a tonne, the strongest since May 28, as investors focused on a shortfall in metal supply. It closed at $6,950 from a last bid of $6,914.50 on Wednesday. A break of $6,970 would take it to its highest since early March. Copper has clawed back nearly 10 percent from more than three-year lows reached in March, but is still down 6 percent this year.
Seasonal demand is expected to wane going into the third quarter, though the shortage in supply is expected to keep a floor under prices. "Global supply and demand is either in balance or a small deficit," said analyst Joel Crane of Morgan Stanley in Melbourne.
"With continued disappointments in a number of key projects, it's very easy to forecast a scenario where the market stays in fundamental balance - prices are fundamentally justified at current levels." Doubts remain that major copper miners will accept a mining export tax being drafted by Indonesia that could end a five-month-old dispute. The row has halted concentrate shipments, eroding mine supply that many analysts had predicted would translate into a copper surplus this year.
Meanwhile, global copper exchange stocks have dived, with LME stocks near their lowest in six years and ShFE stocks at their least in two-and-a-half years. Reflecting tight supply in China's local market, premiums climbed $5 on Wednesday to $90-$110, from as low as $60 two weeks ago, according to China price provider Shmet. In other metals, lead closed at $2,174 a tonne from $2,167, nickel at $18,850 a tonne from $18,575 and zinc at $2,190.50 a tonne from $2,183. Aluminium, untraded at the close, was last bid at $1,897 a tonne from $1,900 at the close on Wednesday.
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