Market Overview

23 March 2022

The ’Tin Soldier’ Falls to Rise Again

Tin prices are strongly correlated with the global economic recovery and financial risks that depend on monetary policy of the leading central banks. After a phenomenal upside exaggerated by the military warfare in Ukraine to $49,400 per tonne in early March, an impressive correction followed.

Markets have stabilised after the initial shock of the Russia-Ukraine clash has subsided and the Federal Reserve (Fed) hiked its interest rates for the first time in four years. Tin opened this week at a rather moderate price of $42,300 per tonne, which are levels last reached at the end of January 2022. All the emotional, geopolitical price spikes were washed away.

However, a strong upward trend which began in April 2020 at $14,700 is intact. For the last two years this rally was fueled by the dovish monetary policy of major central banks to tackle COVID-19, but now the rally may resume amid global economic recovery and lack of worldwide resources.

Tin stocks at London Metal Exchange (LME) rose slightly in March but have remained low for the past few years. Tin stocks in Shanghai dropped by 22% from the beginning of March 2022. Global tin production rose by 13.6% year-on-year to 300,000 tonnes.

According to the International Tin Association (ITA) the average annual tin consumption may rise to 430,000 tonnes by 2025, or 20% above the 2020 level.

However, tightening of monetary policy by the Fed, the European Central bank, and the Bank of England may hamper the price rally. In this regard, the correction in March may be extended to $41,400. So, it may be better to wait until this correction shows clear signs of an end before opening any long positions.

 

Disclaimer:

Analysis and opinions provided herein are intended solely for informational and educational purposes and don't represent a recommendation or investment advice by TeleTrade.

Mark Goichmann
Market Focus

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

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