Sunday, October 23, 2011

Tin has more potential with tightening market

The International Tin Research Institute (ITRI) has reported that there will be a an expected shortfall in the tin market even though prices have fallen by 40% since April. There is a clear reaction to a global slowdown, but the short-term dynamics are masking the reduction in supply from mines and the lower quality of ore being produced. 

The value of tim production is only about $9.5 billion, so fund flows can have sway over pricing in the short-run. Indonesian is halting exports and China is a net importer after exporting earlier in the year. The market contango has flattened, cash premiums have increased, and warrant cancellations have increased.  While growth will still be the key driver for tin, there is a growing opportunity for value investing. 

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