NEW YORK Limited spot
activity kept zinc premiums steady this week, although some
market participants said a perceived supply tightness in
special-high-grade (SHG) zinc could push premiums up.
AMMs spot SHG
premiums are between 7.5 and 8.5 cents per pound, although
several participants maintain that getting zinc at a premium
below 8 cents is difficult.
"I would say SHG is a strong 8
cents now. Its tight. Thats why I emphasize the
word strong," a consumer source told
The tightness is not driven by
dramatically increased consumption, though, as demand from die
casters remains weak.
"We say its tight but we
laugh, too. On the zinc die casting side, its dead.
Theres not much going on," the consumer source said.
"Maybe galvanizers are busy. But Id be blown away to hear
theres a physical shortage."
The supply tightness is more
likely due to the amount of zinc tied up in London Metal
Exchange-listed warehouses, sources said.
"Its tight because of the
warehouses and the financing deals. It takes forever to get the
metal out. Its not really tight, but it seems like it
is," a producer source said.
Global LME warehouses held 1.2
million tonnes of zinc on Jan. 31, with queues to get material
out of stores in New Orleans stretching out to 2014. New
Orleans warehouses held more than 786,000 tonnes of zinc on
Jan. 31, and while LME data shows that some 2,500 tonnes of
zinc was delivered out every day this week, traders said it is
going to consumers.
Canceled warrants at New Orleans
stood at 447,500 tones Jan. 29, according to the latest LME
"(The cancellations) certainly
do not mean better zinc demand since it will be next year
before you can get your hands on it," a trader said. "This is a
blocking maneuverkeep anyone who really needs zinc from
getting it quickly." The warehouses have an incentive to store
the material as annual rents in New Orleans are $170 per tonne,
A second trader said that while
some zinc being delivered out is simply being moved to other
warehouses, he wouldnt be surprised if consumers received
some zinc as well. "I imagine some material will show up in
other warehouses, (but) I imagine a good amount will go to end
users if we believe statistics showing a market moving into a
deficit. Time will tell."
Free-market zinc alloy premiums
also were steady this week, with the benchmark No. 3 and No. 7
alloys at 18 to 20 cents per pound and the No. 5 alloy at 20 to
22 cents per pound. No. 8 alloy continued to trade at 21 to 23
cents per pound, and No. 12 held at 24 to 26 cents per