Singapore 01/08/2016 - A centralised shutdown among tin smelters in China has lasted for nearly a week and if the production cuts are extended, local supply tightness will be exacerbated in the short term leading to further upside for Chinese tin prices, said the International Tin Research Institute (ITRI).
Most tin smelters in China's Yunnan, Guangxi and Jiangxi provinces have suspended or scaled back refined tin production following environmental inspections by the Chinese government since July 19, the ITRI said in a report last Friday.
Some of the smelters are expected to remain idle for more than a month due to plant relocations or equipment maintenance, with restart dates yet to be determined, it added.
When the month-long maintenance shutdown at China Tin Group which started on July 15 is taken into consideration as well, total annual production capacity of tin smelters involved in the latest output cuts amounts to close to 110,000 tonnes, it noted.
The shutdowns have provided support to tin prices on the Shanghai Futures Exchange (SHFE), with market participants seeing further upside for the metal on tightening supply.
There is room for further increase for SHFE tin as concerns increase over tightening supply, Beijing Antaike said late last Friday, while Minmetals Jingyi Futures on Monday suggested clients go long on the metal in the short term due to the production shutdowns.
The SHFE September tin contract reached a three-week high of 122,310 yuan per tonne last Thursday. It closed at 119,760 yuan on Monday, down 310 yuan from Friday’s close.