China’s tin imports surged to 3,610 tonnes in September, up by 125% on the previous month and 167% compared to September last year. It is the highest monthly level since April 2009. The jump reflects the very large premium of Chinese domestic market prices over the London Metal Exchange in recent months, encouraging arbitrage trading. The China domestic price has been higher than LME price from August – the differential was briefly as high as $9,900/tonne at the end of September when the LME price was falling very quickly. The premium has remained close to the $7,000/tonne level in October, so import demand from China is still well supported. LME stocks have declined by more than 4,000 tonnes in recent weeks, and most of the tin withdrawn from the exchange warehouses in Singapore and Johor, Malaysia has probably flowed into China. Volumes could have been larger, but imports from LME warehouses have been delayed by lengthy load-out queues from Johor –the LME warehouse holding most remaining stocks. The China-LME price gap should start to narrow now, as we believe Chinese market prices will face downward pressure with more shipment arrivals imminent.
It was reported that Chinese refined tin production also increased in September, reaching a record 15, 452 tonnes according to National Bureau of Statistics data, up by 15.4% y-o-y. But ITRI China believes that the real production increase was not as large as this, because the official data does not cover many secondary producers and these companies say their production will reduce this year due to the shortage of tin scrap.