The rally in tin, the biggest on the London Metal Exchange this year, is nearing an end because Chinese producers will export more to take advantage of record prices, Galena Asset Management Ltd. said.
“It’s not far off the finale,” Alan Williamson, Galena’s London-based chief economist, told Bloomberg News. Galena is the hedge-fund unit of closely held commodities trader Trafigura Beheer BV, based in Amsterdam. Last year Galena was reported to have been bullish about long-term tin price prospects and invested in mine projects in the UK and Australia.
“Chinese exports will increase from now’” because international prices are higher than in the domestic market, Williamson said.
Open interest of tin futures on the LME, or the total number of contracts that haven’t been closed or settled, peaked at 21,556 as of April 23, 40 percent more than at the end of last year and the highest since February 2006, according to LME data. Trading in tin options jumped to 11,051 lots in April, compared with 1,254 lots a year earlier.
“An awful lot of funds have been buying tin since the beginning of the year,” Williamson said, but “prices at $25,000 aren’t fundamentally justifiable”.
