“Most smelters have closed,” said Hidayat Arsani, the president of the Indonesian Tin Mining Association. “The price just cannot cover the cost. Ideally, the price should be around $21,000 or $22,000 a ton. If this continues, we can't work anymore.”

Eoin Treacy's view The focus of most Industrial metals commentary has been on the demand side of the equation, with fears for the slowing global economy, the Eurozone's hardship and China's migration to a more consumer oriented growth model predominating. As a result of these concerns, monetary policy remains extremely accommodative, particularly in Europe, Japan and the USA.

On the supply side of the equation we have long defined the bull market in commodities in terms of the rising cost of production. As the above story reiterates, the marginal cost of production for tin has increased substantially over the last decade. Despite its steep decline over the last year, tin still trades at more than double the highest level posted between the early 1990s and 2003. The fact that this pricing level represents a Rubicon for smelters highlights the continued pressure experienced by producers.

In tandem with the above issues, the US Dollar's recent pullback is an additional consideration. The Euro has been particularly weak as questions about the dedication of creditor nations to the single currency have sparked fears of a breakup. However as indications improve that the necessary decisions to sustain the currency are forthcoming it has at least partially unwound the oversold condition relative to the 200-day MA. A sustained move above $1.28 would be required to indicate a return to medium-term demand dominance.

Against a background where the Dollar has weakened, at least in the short term, commodity prices have bounced. Tin has firmed in the region of the September lows and has rallied to test the six-month progression of lower rally highs. A sustained move above $20,000 would suggest a return to more than temporary demand dominance. Zinc and Lead have also at least steadied in the region of the October lows.

Nickel has trended lower over the last six months and has returned to test the psychological $15000 area. A break in the progression of lower highs will be required to question supply dominance. Aluminium has a similar pattern.

Copper has held above the October low and has been ranging around $7500 since June. It has firmed from the lower side and a sustained move below $7300 would be required to question potential for some additional higher to lateral ranging.