(Jan 26): Tin retreated from a record after the Shanghai Futures Exchange announced restrictions on positions for some clients suspected of not properly disclosing their ultimate ownership.
Three groups of clients — numbering sixteen in total — would be subject to one-month limits on opening new positions, as well as curbs on withdrawing funds from both the tin and silver markets, the bourse said in a statement. Tin slumped more than 6% in London while the action by China’s top commodities exchange prompted other metals including copper to soften.
Global metals markets — both base and precious — have seen powerful rallies and a surge in trading activity since the start of the year, with many materials hitting all-time peaks. That jump had already prompted other measures by commodities exchanges to tackle market risks.
Tin saw a major spike last week — gaining more than 18% on the London Metal Exchange — and hit a fresh record earlier on Monday (Jan 26). The metal, used in packaging and electronics, is a relatively small market in London, compared with materials such as copper and aluminium. It can be prone to major swings.
“Metals have been rising too rapidly,” said Gao Yin at Shuohe Asset Management Co. “With authorities issuing measures against trading, sentiment will be cooling a bit.”
SHFE’s announcement of trading restrictions didn’t give any details about which companies were affected, exactly what was being investigated nor the precise scope of the restrictions. It said the clients were suspected of “failing to disclose actual control relationships”, according to the statement.
See also: Mining stocks gain in Asia as hard-asset trade gathers pace
In Shanghai, tin ended 1% lower at 425,340 yuan a tonne, after earlier gaining as much as 7.7% to a record. On the LME, futures were 5.6% lower at US$53,625 a tonne at 7.26am local time, after gaining 1.2% to an all-time high. At the close of last week, the LME price had been up about 40% year-to-date.
Uploaded by Arion Yeow
