LONDON European tin premiums could soften during the first quarter as prices for material on the London Metal Exchange continue to climb.
Premiums have remained unchanged for several months as the market continues to be illiquid, but the higher LME prices could drive even more buyers away, market players said.
"The significant price rise on the LME has taken many consumers by surprise, so they are not rushing in to buy," one trader told AMM sister publication Metal Bulletin.
Three-month tin prices on the LME traded at $24,150 per tonne in the official session Thursday compared with $23,455 per tonne on Dec. 27.
Trading has been quiet across the base metals as the new year begins, and tin has been no exception, a second trader said.
"It has been a quiet start on the tin front, and with these high prices, I think warrant business will struggle initially," he said.
Momentum is likely to continue to be subdued in the spot market for the next few days, with a number of participants remaining out of the market following the year-end holidays.
"We expect there will be more spot business next week when everyone is back to work and in full swing again," the first trader said. "This will give a better guide to the actual state of the market."
Once this happens, market participants said they expect premiums to lose strength as the rally in base metal prices continues.
Premiums for 99.85-percent tin in Europe have traded at $350 to $500 per tonne since July.
An earlier version of this story appeared in AMM sister publication Metal Bulletin.