Tin Market Update
17
SETTING THE GLOBAL STANDARD Tin Market Update Beer & Co Tin Conference 2017 Presented by Joe Vu November 2017 Classification: [External]
Transcript of Tin Market Update
SETTING THE GLOBAL STANDARD
Tin Market Update
Beer & Co Tin Conference 2017
Presented by Joe VuNovember 2017
Classification: [External]
2
Evolving with the needs of physical industry140 years setting the global tin reference price
1877
1877LME commences Copper, Tin
198915 month1912
Standard Tin contracts A- 99.97%B- 99%
1989 USD Contract
1900
1952
1941Tin trading ceases Japan enters WW2
1985 19891968
Tin Standard
LME Tin (current)Tin High Grade
Tin Crisis Suspended
3
Continued investment: physical relevancePricing represents physical market, thanks to wide range of deliverable brands
Central & South America
2
NorthAmerica Europe
1
Middle East & Africa
Russia
Asia 17
AustraliaIndonesia
9
Brand listing: Production capacity of 1,000mt/yr
In production for at least 12 months
4
LME Tin Brands
Added in 2017
9 out of the world’s top 10 producers have LME deliverable brands Listing parameters amended to streamline process and capture tin producers with smaller production capacities
Country Brand Producer Year Listed
Belgium MC Metallo-Chimique N.V. Pre 2002
Bolivia ENAF Empresa Metalurgica Vinto Pre 1998
BrazilMAMORE Mineracao Taboca SA Pre 2000
WHITE SOLDER BRASIL White Solder Metalurgia e Mineracao Ltda 2015
China
JH Laibin China Tin Smelting Co., Ltd. 1992
PGMA CNMC (Guangxi) PGMA Co., Ltd. 2002 – currently suspended
YS Gejiu Zili Mining and Smelting Co., Ltd. 1998
YT Yunnan Tin Company Limited 1992
YUNHENG Yunnan Chengfeng Non-Ferrous Metals Co., Ltd. 2006
YINSHENG Gejiu Jinye Mineral Co Ltd 2015
Indonesia
BANKA PT. Timah (Persero) TBK Pre 2002
IMLI PT. Bukit Timah 2011
IMLI BELITUNG PT. Babel Inti Perkasa 2016
KUNDUR PT. Timah (Persero) TBK 2010
MENTOK PT. Timah (Persero) TBK Pre 2002
MSP PT Mitra Stania Prima 2017
RBT PT. Refined Bangka Tin relisted in 2017
PTU PT Prima Timah Utama 2017
TININDO PT. Tinindo Inter Nusa 2012
Malaysia MALAYSIA SMELTING CORPORATION Malaysia Smelting Corporation Bhd. Pre 2002
ThailandPHUKET Thailand Smelting & Refining Co Ltd 1997
THAISARCO Thailand Smelting & Refining Co Ltd Pre 1991
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Tin prices 2017 under performing
0%
20%
40%
60%
80%
100%
120%
140%
Jan 2017 Feb 2017 Mar 2017 Apr 2017 May 2017 Jun 2017 Jul 2017 Aug 2017 Sep 2017 Oct 2017
3M Prices
Aluminium Copper Zinc Nickel Lead Tin
6
0
20
40
60
80
100
120
140
Jan
Feb
Mar Ap
rM
ay Jun
Jul
Aug
Sep
Oct
Nov
Dec Jan
Feb
Mar Ap
rM
ay Jun
Jul
Aug
Sep
2016 2017
('000
mt)
Total Open Interest in tonnes
LME SHFE
London remains the home of Tin positionsLME’s physical client base is demonstrated by open positions
>90% of OI on the LME
SHFE Avg0.8
LME Avg3.8
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Jan
Feb
Mar Ap
rM
ay Jun
Jul
Aug
Sep
Oct
Nov
Dec Jan
Feb
Mar Ap
rM
ay Jun
Jul
Aug
Sep
2016 2017
OI in days of volume
SHFE LME
7
Asian hour tin volumes has grown since SHFE contract launched Evidence of arbitrage activity
4%
6%
8%
10%
12%
14%
16%
18%
0
5
10
15
20
25
30
35
Jan-
15
Feb-
15
Mar
-15
Apr-1
5
May
-15
Jun-
15
Jul-1
5
Aug-
15
Sep-
15
Oct
-15
Nov
-15
Dec
-15
Jan-
16
Feb-
16
Mar
-16
Apr-1
6
May
-16
Jun-
16
Jul-1
6
Aug-
16
Sep-
16
Oct
-16
Nov
-16
Dec
-16
Jan-
17
Feb-
17
Mar
-17
Apr-1
7
May
-17
Jun-
17
SHFE
Dai
ly V
olum
e (‘0
00 m
t)
Tin volumes
SHFE Tin ADV LME Tin % Pre-7am
Q1-Q3 Avg 5%
8
18% 17%
15%
11%9% 9%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Zinc Nickel Copper Lead Tin Aluminium
LME Share of Volume Pre-7am (%)
2015 2016 2017
Higher trade taxes correlate with lower Asian hour volumesTo be supported by change in trade taxes?
% is based purely on the 3M trading on LMESelect
Import 0% 3% 0% 3% 3% 0%
Export 1% 5% 5% 0%/ 10% 0%/10% 15%
China trade taxes
9
A high portion (>40%) of SHFE Tin trades in the Chinese night time to arb with London
London hours give SHFE Tin relevance
0%
10%
20%
30%
40%
50%
60%
0
100
200
300
400
500
600
700
800
Mon
thly
Vol
ume
(‘000
mt) SHFE Volumes Day & Night Session
Day Night % Night
>50% means more trading in night!
10
LME Warehouse Tin Stocks
0
5000
10000
15000
20000
25000
30000
4/01/2010 4/01/2011 4/01/2012 4/01/2013 4/01/2014 4/01/2015 4/01/2016 4/01/2017
Total StockCancelled Stock
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SHFE vs LME inventoriesTin Stocks
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Stoc
ks in
mt
Tin Stocks
SHFE On Warrant LME Stock
12
Stock flow remains robust both in & out
-4000
-3000
-2000
-1000
0
1000
2000
3000Ja
n
Feb
Mar Ap
r
May Jun
Jul
Aug
Sep
Oct
Nov
Dec Jan
Feb
Mar Ap
r
May Jun
Jul
Aug
Sep
Oct
Nov
Dec Jan
Feb
Mar Ap
r
May Jun
Jul
Aug
2015 2016 2017
Delivered In Delivered Out
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High grade premium is closer to 99.85%Market in Continuous Backwardation
-200.00
0.00
200.00
400.00
600.00
800.00
1000.00Ja
n-16
Mar
-16
May
-16
Jul-1
6
Sep-
16
Nov
-16
Jan-
17
Mar
-17
May
-17
Jul-1
7
Tin Cash- 15 months
-100
0
100
200
300
400
Jan-
16
Apr-1
6
Jul-1
6
Oct
-16
Jan-
17
Apr-1
7
Jul-1
7
Cash-3 Month($/mt)
250
300
350
400
450
500
Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17
Tin Premiums get closer independent of grade
European Free Market Tin premium spot 99.85% $ per tonne European Free Market Tin premium spot 99.9% $ per tonne
14
Compare SHFE vs LME forward curve
0
200
400
600
800
1000
1200
1400
1600
1800
2000
19700
19800
19900
20000
20100
20200
20300
20400
20500
Aug-
17Se
p-17
Oct
-17
Nov
-17
Dec
-17
Jan-
18Fe
b-18
Mar
-18
Apr-1
8M
ay-1
8Ju
n-18
Jul-1
8Au
g-18
Sep-
18O
ct-1
8N
ov-1
8
LMEOpen Interest
LME Tin Price
0
5000
10000
15000
20000
25000
18200
18400
18600
18800
19000
19200
19400
19600 SHFE
Tin : SHF : Open Interest : 8/11/2017
SHFE Tin Price ($/mt, Ex-VAT)
15
LME Singapore Contacts
William Fyfe
Head of Singapore
Edric Koh
Head of Physical Markets Sales,
Southeast Asia
Joe Vu
Electronic Trading Sales,
Southeast Asia
Xu Xiao
Head of Japan
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Historical LME Tin Inventory LevelsAppendix 1
