(Jan 14): Base metal markets roared higher on Wednesday, extending a powerful start to the year’s trading, with both tin and copper rallying to records.
Tin — used in electronics and packaging — surged as much as 6% to US$52,495 ($67,638) a ton on the London Metal Exchange (LME), taking gains since the start of this year close to 30% and topping a peak set in 2022. Copper extended its advance above US$13,000 a ton, while nickel, zinc and aluminium also logged gains.
Industrial metals have boomed at the start of the new year, as investors bet on US Federal Reserve easing, a weaker dollar, and growth sectors like artificial intelligence and renewable energy aiding demand. The LMEX Index — which tracks the fortunes of the main six including copper and tin — is on pace to top the record that was set by the gauge more than three years ago.
Tin is the least-liquid market on the LME, and can be subject to periods of dizzying volatility. A rush of Chinese investors into commodities has also fuelled gains, with tin’s trading volumes on the Shanghai Futures Exchange reaching a daily record on Tuesday, before prices spiked by their daily limit on Wednesday.
The metal’s use in soldering means it has long been viewed as a proxy for the computing sector, and funds have piled into the market in parallel with strong investments in AI and data centres. As with other metals, supply disruptions have also spurred the bulls, with uncertainties over exports from second-biggest producer Indonesia still stalking the market.
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China optimism
The surge in trading volumes on China’s domestic metals exchanges has echoed inflows into local equities markets, which have lifted a broad gauge of domestic stocks to the highest level since 2015. Investors are broadly turning more positive on the nation’s financial markets for this year.
For tin, a major unknown is how much supply Indonesia will ship. A military-led crackdown on illegal mining in the main tin region squeezed flows last year. Exports dipped in December on-month and the outlook remains unclear, in part as the government has yet to approve mining quotas this year.
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Despite the surge in prices, the tin market has yet to indicate physical tightness, with stockpiles held in LME-tracked sheds having risen to the highest in 11 months. In addition, futures are trading at a premium to spot prices, a structure known as contango that indicates near-term supply remains plentiful.
Tin traded 5.2% higher at US$52,085 a ton on the LME at 12.13pm Shanghai time on Wednesday. It also hit an all-time high on the Shanghai Futures Exchange, rising almost 9% to its daily upper limit at CNY413,170 (US$59,212 or $76,287) a ton.
Uploaded by Tham Yek Lee
