Industrial metals: Copper and tin reach record high prices

Last week, copper briefly rose above the USD 10,000 per ton mark for the first time in more than ten years. However, the gains were subsequently lost completely - we attribute this to profit-taking and the firmer US dollar. Afterwards a weaker official Chinese PMI prevented a new price increase.

The tin price rose by over 5% the day before yesterday and cracked the USD 28,000 per tonne mark. On friday, it continued to rise at times to just under USD 29,000. This was the highest level since July 2011. In terms of performance, tin is thus in no way inferior to copper: since its low in March last year, the tin price has now more than doubled. As with copper, however, experts believe the rally in tin is also running hot: from a technical perspective, tin is currently overbought.

In addition, the backwardation in the forward curve is again somewhat more pronounced, i.e. the forward curve has steepened again somewhat at the front end. The spread between the spot price and the 3-month future has more than doubled within the last two days to around $2,500 per ton. This is the widest spread in 1½ months and points to a renewed squeeze on the tin market.

At the moment, however, this is not yet as pronounced as in mid-February (spread of USD 6,500 at times). Most recently, data was actually published that spoke for an easing on the global tin market: On the one hand, China had exported the largest net amount of tin in almost two years in March due to favorable arbitrage opportunities. Secondly, Indonesia, the world's largest tin exporter, had also exported significantly more tin in March. The very high prices should also provide incentive to produce and export even more tin. And the World Bureau of Metal Statistics last week had already shown a supply surplus for the first two months of the year.

Source: Commerzbank Research, Photo: Fotolia