September 28, 2016 / 10:42 AM / 3 years ago

METALS-Tin price hits 20-month high as inventories fall

* On-warrant LME tin inventories fall to lowest since 1998

* Lead touches 16-month high of $2,001

* Market questions impact of Philippine nickel closures: ANZ (Updates with closing prices)

By Eric Onstad

LONDON, Sept 28 (Reuters) - Tin hit its highest price since January last year on Wednesday after inventories dwindled while nickel struggled to advance as investors assessed the likely impact of mine suspensions in top ore exporter the Philippines.

Falling shipments from leading tin exporter Indonesia and question marks over whether a surge in mining in Myanmar can be sustained has sparked a scramble for the metal used mainly in solder for the electronics industry.

“On-warrant” tin inventories in warehouses approved by the London Metal Exchange MSNSTX-TOTAL, or metal not earmarked for delivery and available to investors, has dropped to 1,625 tonnes, the lowest since 1998, LME data showed.

Benchmark tin prices on the LME closed up 0.6 percent at $19,850 a tonne after touching $19,950, the highest since January 2015. Tin has gained 37 percent this year making it the second best performing LME metal behind zinc.

One analyst, however, said the tin rally may be capped if inventories in warehouses that are not regulated by exchanges appeared on the market.

“There is a good fundamental reason why the tin price has risen this year, but the market may not be as tight as it would appear from the exchange data,” Capital Economics senior commodities economist Caroline Bain said.

“I suspect that there is more metal out there than we can see on the exchanges. Certainly last time the tin price had a big rally, stocks started to fill up again,” she said.

Three-month LME nickel ended 0.6 percent higher at $10,695 a tonne after touching a seven-week high a day earlier.

The metal used to make stainless steel peaked at $10,900 on Tuesday, its strongest since Aug. 10, after the Philippines ordered the suspension of 20 more mines for environmental violations.

The mines, however, were given a week to explain their violations before a final decision on any suspension.

The Philippines is the source of nearly a quarter of the world’s mined nickel supply - most of which is shipped to China.

Nickel’s failure to build on gains suggests the “market’s still a bit dubious as to the impact of these potential closures”, ANZ senior commodity strategist Daniel Hynes said.

The impact to global nickel supply may also be limited at this time of the year given the monsoon season which affects mining operations and shipments there, he said.

Elsewhere, LME zinc finished 0.6 percent stronger at $2,333.

Standard Chartered analyst Nicholas Snowdon said in a note that the zinc rally has lost momentum, partly due to weaker demand in top consumer China.

“The zinc bull story remains on hold until this key tightening channel is re-established,” he said.

Copper closed up 0.7 percent at $4,818, aluminium rose 0.9 percent to $1,665 and lead climbed 1.6 percent to end at a 16-month high of $1,997.


Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Most active ShFE nickel

Three month LME tin

Most active ShFE tin (Additional reporting by Manolo Serapio Jr. in Manila; Editing by Elaine Hardcastle and David Clarke)

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