Market Nuggets: BNP Paribas: Chinese Destocking Masking Underlying Deficit In Tin

05 May 2011, 10:56 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) -- BNP Paribas says “the tin bull market is not over.” LME warehouse stocks have increased by almost 9,000 metric tons since the low in October. However, this rise coincided with destocking in China, which previously built up inventories in 2009 and much of 2010, says BNP. While it is uncertain how lock the subsequent destocking may occur, “we remain convinced that tin is in structural deficit,” says a report from BNP Paribas senior metals strategist. “Although our figures are less extreme than before, we forecast an underlying global deficit of 10kt or more for each of 2010, 2011 and 2012.” BNP looks for tin demand to grow by only 6% to 7% between 2010 and 2012. However, BNP describes tin as “primarily a supply-side story,” with world mine production expected to rise only 6% to 7% over 2011-2012. “The (Chinese) destocking could continue for a while. But although it is impossible to know precisely how much Chinese inventory remains, we do not believe that it is sufficient to cover the underlying tin supply deficit over the balance of 2011 and through 2012.” BNP looks for tin to “recover to a new high and perhaps challenge USD 35,000/t at some point in the next 12 months.”

By Allen Sykora of Kitco News; asykora@kitco.com