NEW YORK — Zinc premiums remained steady Feb. 14, although market participants say they could tick up in the next few weeks.

While AMM's spot special-high-grade (SHG) zinc premiums remained between 7.5 and 8.5 cents per pound, a number of industry participants said getting material under 8 cents is difficult, and traders and producers will try to push to make 8 cents per pound the new low as they gather at the International Zinc Association’s conference in Cancun, Mexico, Feb. 25 to Feb. 27.

"They’re a solid 8 (cents)," a trader told AMM.

A consumer source said he’d heard of offers at 7.5 cents per pound, but he thinks everything seems to be pointing to premiums moving up and feels that traders will make the case to push premiums north as London Metal Exchange-listed warehouses continue to store nearly 1.2 million tonnes of zinc, including more than 772,000 tonnes in New Orleans. Canceled warrants in New Orleans stood at 422,425 tonnes Feb. 15, which has pushed queues for zinc out to a year, keeping the material off the market and causing supply tightness.

"(Premiums) seem to be gyrating up. The Cancun conference will lead to a very good push on zinc pricing. It will be interesting, with the momentum more on the upside than on the downside," the consumer source said. "Everyone will want to talk premiums up. I personally think (traders will) try to reaffirm that premiums should go higher because of the warehouses."

While the warehousing situation has raised aluminum spot premiums to record highs—AMM’s Midwest spot premiums are between 11.3 and 12 cents per pound—it has not had the same dramatic effect on zinc premiums yet, which could be due to demand, sources said.

"I’d say it’s pretty quiet. Whether it’s automotive, appliances, computer parts, it’s pretty average," an alloy producer source said. "It’s not horrible, though."

It is still possible for consumers to get their hands on material, another consumer source said. "From a logical standpoint, you’d say yes (the warehouses cause tightness), but from a physical standpoint, no they’re not. There is plenty of zinc around. And it goes to show you that however much is in the warehouses, there’s a lot more out there that isn’t."

Demand for zinc does appear to be improving as construction and housing show signs of life, and automotive continues to be strong.

"There are a lot of positives now. Housing seems to be moving on the upside. Appliances and automotive are decent, too," the first consumer source said. "Thank God cars are moving. If they weren’t, everybody would have a problem."

The food and fertilizer industries in India and China also will boost zinc demand in the United States, he added.

Free-market zinc alloy premiums remain steady, with the benchmark No. 3 and 7 alloys at 18 to 20 cents per pound and the No. 5 alloy at 20 to 22 cents per pound.