LONDON (Commodity Online): Tin’s fundamental backdrop offers solid support for its strong showing relative to most other base metals so far this year, said Barclays Capital in a research note.
For the year to date, tin is up 17% and zinc by 18%, and the bank calls them the clear standouts. The refined tin market is projected to be in a 5,000-metric-ton deficit this year, the sixth deficit in seven years, Barclays added.
This will ultimately drive the stock-to-consumption ratio to a new record low, the bank continues. “Moreover, this has been reflected in sustained draws in LME stocks, which have fallen by close to 60% since August last year to the lowest level since February 2009,” Barclays said.
“The current extremely elevated level of cancelled warrants as a proportion of total LME stocks (close to 23%) points to a continuation in the trend of draws. In addition, given the import arbitrage window into China remains firmly open, as it has since August 2011, there is the prospect of sustained strength in imports which are the key driver of drawdowns.”
While zinc is another of the outperformers so far this year, Barclays cautions that this metal may be lacking an adequate fundamental foundation to support sustainability after a surplus in 2011 and with another expected this year.
