Open interest dropped to 24,611 contracts, down from a peak of 50,251 in July last year and the lowest since November 2008. Each contract represents 5 metric tons of tin. The data reflect market open interest, reported by LME members and compiled by the exchange, as of May 7. Prices have slumped for three consecutive weeks.

"Falling open interest and lower prices suggest the dominant theme has been the liquidation of long positions," or bets on rising prices, Leon Westgate, an analyst at Standard Bank Plc in London, said by phone.

Tin advanced as much as 13 percent this year as investors anticipated that supply would fall short of demand. Consumption will outpace production by 2,000 tons this year, after a 14,000- ton surplus last year, Standard Bank estimates. Stockpiles in warehouses monitored by the LME have shrunk 21 percent, the most of any of the main industrial metals traded on the bourse.

Tin for delivery in three months, the benchmark contract, fell 1.4 percent to $17,499 a ton as of 1:39 p.m. in London. The contract for immediate delivery traded at a $73 discount yesterday, indicating plentiful supply. The cash contract traded at a premium of as much as $730 in September last year.

"After the excitement we've seen in prices and spreads last year, interest in the metal appears to have declined," Westgate said. Still, "I'm bullish tin, given Chinese demand and uncertainties over production levels from Indonesia."

China is the world's largest tin consumer and Indonesia the biggest exporter.

One party holds at least 40 percent of short positions, or bets on lower prices, expiring in May, the latest LME data show. The biggest bet on higher prices expiring in the same month is also at 40 percent or more.

(from Bloomberg)