Tin hit a 3-1/2 month low in Malaysia on Wednesday, breaking the long-held support of $8,000 a tonne, after investors were spooked by a one percent drop in the London price. But dealers said a quick rebound was likely, as demand from Japanese buyers was unlikely to leave the market at the current level for long. Spot tin on the Kuala Lumpur Tin Market fell $25 to $7,990 a tonne, on a volume of 105 tonnes.
The last time it went below $8,000 was on February 18, when it closed at $7,924. Dealers said the drop was sparked by Tuesday's sell-off in tin on the LME. Buckling under the pressure of a higher US dollar, LME tin fell $85 to 7,925 a tonne.
"There were lots of sellers today morning when they saw how much the tin LME had fallen," said a trader in the north Malaysian island of Penang. "But I don't think the market will stay below $8,000 for more than a few days, given the way the Japanese have been buying." The Japanese are big users of tin, particularly for soldering needs in their huge electronics industry. Initial bids on Wednesday for Malaysian tin from Japanese, European and Malaysian buyers totalled 45 tonnes, against sellers' offers of 68 tonnes.
The $60 gap between the price change in Kuala Lumpur and London widened accordingly the premium for a tonne of Malaysian tin made available to Europe.
The premium, based on a formula that includes freight, insurance and other financial costs, stood at $290 a tonne on Tuesday, against Tuesday's $230.