Bloomberg News

Tin Gains Most in Four Months as Fed’s Rate Pledge Boosts Demand

January 26, 2012

Jan. 26 (Bloomberg) -- Tin climbed the most in almost four months in London as prospects of low U.S. interest rates at least until 2014 boosted speculation of increased demand for the metal used in mobile phones, plasma screens and cars.

The surge has made tin this year’s second-best performing commodity of 80 raw materials after being the biggest loser of industrial metals in 2011, according to data compiled by Bloomberg. The Federal Reserve’s commitment to keep U.S. interest rates near a record low through 2014 also sent copper 2.5 percent higher and nickel up 3.2 percent.

“The market is heading in a direction of record tightness,” said Nicholas Snowdon, an analyst at Barclays Capital in New York. “There is a greater level of confidence than what we saw a quarter or so ago.”

Tin for delivery in three months jumped 6.9 percent to $24,005 a metric ton, the biggest gain since Sept. 27. Prices have climbed 25 percent this year, just behind rubber as the biggest gainer of 80 commodities. The high this year was forecast to be $26,000 a ton, the median of 17 analyst and trader estimates compiled last month by Bloomberg.

Sales of consumer electronics from smartphones to digital cameras will exceed $1 trillion for the first time this year, driving tin consumption higher just as stockpiles of the metal are the lowest since March 2009. About 23 percent of total stockpiles now await delivery. China imported 4,343 tons of tin in November, the most since April 2009, customs data show.

Tin Shortage

Demand will outpace supply for a third consecutive year, with the 9,400-ton shortage seen by ITRI Ltd., a St. Albans, England-based industry group, enough to make about 9 billion mobile phones. Electronics account for more than 50 percent of consumption, according to ITRI, whose members produce about two in every three tons of the metal.

Consumer electronics shipments will rise 5 percent to $1.04 trillion in 2012, according to GfK Digital World and the Arlington, Virginia-based Consumer Electronics Association, which represents about 2,000 companies.

The LME index of six metals including tin and copper has risen 12 percent this year, the best annual start in 11 years, according to Bloomberg data. Metals also rallied today after U.S. durable-goods orders rose more than forecast last month. Bookings for long-lasting goods advanced 3 percent after rising 4.3 percent the prior month, the biggest back-to-back gains in almost a year, according to Commerce Department data today in Washington. Economists projected a 2 percent increase in demand for durable goods, which are those made to last at least three years, according to the median forecast of 78 economists surveyed by Bloomberg News.

--Editors: Claudia Carpenter, John Deane

To contact the reporters on this story: Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net;

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.


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