Tin Slumps Most in Seven Years on Spike in Chinese Selling

(Bloomberg) -- Tin plunged the most in more than seven years in London following a wave of selling from China’s onshore metals market, where sentiment has soured as investors focus on signs of economic weakness.

The metal, which is mostly used in soldering, dropped 6.3% to settle at $17,700 a metric ton on the London Metal Exchange, the biggest drop since September 2011. The decline tracked a sharp slump in prices as the evening trading session got underway on the Shanghai Futures Exchange.

Most base metals were under pressure Tuesday as optimism over the rapprochement in U.S.-China trade relations gave way to concerns about the global economy. Factory activity across Asia and Europe took a hit in June, while the U.S. showed only meager growth, recent data showed. The latest price rout deepened losses posted last quarter as tin stockpiles rose sharply on the LME.

The outlook for tin is being further dented by a steep decline in sales of semiconductors, a major source of demand. Japan moved to block exports of critical chip-making components to South Korea this week, in an escalation of a long-running dispute over colonial-era reparations. The news sent shares in Korean semiconductors tumbling.

“Onshore selling has been behind today’s move,” Alastair Munro, a broker at Marex Spectron Group, said by email. Volumes spiked in a wave of selling as the Shanghai bourse reopened, he said. “It’s symptomatic of how the onshore markets view the base metals as whole.”

The drop in tin on Tuesday took this year’s loss to about 9%.

After the poor factory data, tin, which is extensively used in the manufacturing industry, has been “probably the weakest link” among falling base metal prices, Richard Fu, head of Asia-Pacific region for Amalgamated Metal Trading, said by email.

--With assistance from Justina Vasquez.

To contact the reporter on this story: Mark Burton in London at mburton51@bloomberg.net

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Nicholas Larkin, Liezel Hill

©2019 Bloomberg L.P.