London Metal Exchange tin fell 10% Wednesday on fund selling triggered by news that a major producer would resume exports, with further sales expected overnight, market players said.
After hitting a fresh record high of $15,100 a metric ton earlier Tuesday, news that Indonesia's PT Koba Tin would immediately resume tin exports trickled through the market, instigating an initial wave of selling.
Once the U.S. entered the market, trend-following funds took advantage of the illiquid market conditions and extended those sales, said a broker. Tin fell to a low of $13,600/ton late Wednesday before recouping part of those losses to a PM kerb of $13,700/ton.
Further tin sales are expected overnight during New York hours, the broker said, adding that the next solid support is $13,200/ton – the low from late March. "A breach of $13,200/ton and there's no resistance in sight until the 100-day moving average of $12,280/ton," he said.
Indonesia produces about 120,000 tons of tin a year, around one third of global supply. The market had been awaiting Koba Tin's export license as it is the country's second largest producer.
Koba Tin's parent company Malaysia Smelting Corp. said the approval of its export license was delayed as the Ministry of Trade had asked for a recommendation from the Ministry of Natural Resources and sought clarification from police on the company's operations.
The Ministry of Trade in January imposed new regulations governing tin exports and has said all tin producers must demonstrate that they can meet all the conditions to be granted new licenses, which they need to be able to export tin.
In other metals, profit-taking and easing supply concerns weighed across the base metals complex.
Three-month copper retreated roughly 0.7% from its recent seven-month high of $8,100/ton to a PM kerb of $7,895/ton triggered in part by news of a market surplus.
The World Bureau of Metal Statistics said Wednesday that the global copper market was in a surplus of 115,000 metric tons during January and February.
In addition, easing market concerns of a supply disruption, Xstrata PLC said it is using road transport to get concentrates from its Alumbrera copper mine in Argentina to the port after flooding damaged rail lines last week. In addition, production hadn't been impacted so far, the company said.
The mine produced around 180,000 tons of copper in concentrate in 2006.
Meanwhile, traders said the focus of the copper market remains on developments of Freeport's Indonesian Grasberg mine.
Thousands of workers have gone on strike at the mine, which produces 1800 tons of copper and 9000 troy ounces of gold a day. The strike is expected to continue until April 20, when negotiations between labor representatives and company resume.
The copper market is in a "wait-and-see" mode, trying to determine whether the protest at the Grasberg mine will turn into a more prolonged strike, or is merely a three-day affair, said Edward Meir of Man Financial. Barring a decision to hold an indefinite strike at Grasberg, copper is unlikely to have enough momentum to push beyond $8,200/ton, Meir added.
Meanwhile, three-month zinc retreated nearly 1% to a PM kerb of $3,679/ton, triggered in part by news of a zinc market surplus, according to the broker.
The International Lead and Zinc Study Group said earlier Wednesday that global refined zinc production in January and February exceeded refined demand by 44,000 tons. This reversed a deficit of 83,000 tons in the same period of 2006.
Three-month nickel traded below $48,000/ton due in part to an increase in LME nickel stocks Wednesday.
According to market sources, the first containers of nickel recovered from container ship MSC Napoli will make the first step in their journey to consumers this week.
The MSC Napoli is owned by U.K.-based Zodiac Maritime Agencies Ltd. and is on a long-term charter to MSC. The ship ran into trouble
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