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SHG zinc premiums begin to firm up for 2013

Keywords: Tags  zinc premiums, shg zinc, special high grade zinc, 2013 contracts, zinc alloy premiums, Daniel Fitzgerald

NEW YORK — Special-high-grade (SHG) zinc premiums appear to be firming at around 8 cents per pound for 2013 contracts, with one producer source saying that a persistent deficit in local supply and steady demand have driven the increase.

The source said that his company has already done a few deals in a range of 8 to 8.5 cents per pound, and the company expects to close a "big chunk" of its contracts within the next few weeks.

Negotiations have been "pretty straightforward this year," despite premiums moving up a penny per pound from last year’s levels, he said. "I think people have more or less accepted that North America is in deficit, and that has pushed premiums up the last couple of years. Volumes are the same, and there haven’t been any smelter closures or anything, so demand looks to be steady."

A second producer source told AMM that while SHG contract negotiations are still ongoing, he expects premiums to settle at an average of 8 cents per pound, adding that he has sold at 8.5 cents per pound.

While one consumer agreed that SHG premiums for 2013 would be around 8 cents per pound, a second consumer told AMM that he still expects them to settle somewhere around 7.25 cents per pound.

A third consumer said that 2013 premiums were around "7.5 to 8.25 cents per pound," having previously estimated that they could settle as low as 7 cents per pound.

Meanwhile, No. 3 and 7 alloy spot premiums moved up to a range of 17 to 19 cents per pound from 16.5 to 18.5 cents, with producers telling AMM that a recent rise in the spot SHG premium had forced the benchmark alloy slightly higher (, Oct. 17).

"We’re going into a dull period. The six weeks from Thanksgiving to the New Year are usually pretty quiet," a source at one alloy producer said. "Jan. 1 is when things pop again."

The London Metal Exchange three-month zinc contract closed Wednesday’s official session at $1,948 per tonne (88.4 cents per pound), up 3.8 percent from $1,876 per tonne (85.1 cents per pound) at the end of October.

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