Market Briefing - May 18, 2009

The price of tin surged to $14,400/tonne on 13 May, a near six month high, driven by short-covering and fund buying. In addition, the monthly average rose to $11,743 in April, its highest level for four months. Continued problems at major producers, China and Indonesia, have also served to assist the rally. However, thus far, these supply problems have had little effect in supporting the price, beaten down by the dire demand environment to record its lowest monthly average in 27 months in March of $10,675/tonne.

Tin stocks have continued to increase, and are now back above 13,000 tonnes at 13,405 tonnes on May 13. This is up 21% on levels seen at the start of the second quarter, and, given the problems on the supply side, highlights the severity of the demand downturn.

Sluggish mine production feeds into lower refined output in 2009…
Global concentrate production has faltered over the first two months of 2009, down 22.6% y-o-y at 38,800 tonnes, according to the WBMS. This has continued a declining trend after mine production fell 11.1% in 2008 to 311,500 tonnes. Insufficient raw material supply is becoming a significant problem for tin smelters. Many, who previously stopped production primarily due to the low prices, are now struggling to restart due to the shortage in raw material supply.

> This article gives the introduction to our latest detailed analysis on the market. To access our latest detailed monthly report on the base metals markets plus the recent briefing update, click on the links below.

> Base Metals Market Briefing - December 9, 2008.

> Base Metals Market Briefing Update - December 16, 2008.

Disclaimer: Whilst every effort has been made to ensure the accuracy of the information used in this document, GFMS Metals Consulting cannot guarantee such accuracy and GFMS Metals Consulting does not accept responsibility for any losses or damages arising directly, or indirectly, from the use of this information.