NEW YORK Offers for
special-high-grade (SHG) zinc in New Orleans have risen
considerably in recent weeks, according to market
Traders with metal on the ground
in New Orleans are now offering premiums for SHG of between 6
and 7 cents per pound basis f.o.t., sources said.
"If someone comes to me looking
for metal, Im offering 7 cents (per pound)," one trader
The increase comes as zinc
inventories in London Metal Exchange-approved warehouses in New
Orleans continue to be tied up in lengthy queues and after
Baar, Switzerland-based Glencore Xstrata Plc apparently
signaled to its customers that it would have no spot
availability from its Portovesme smelter in Italy until June at
the earliest, the trader said.
"Six to 7 cents is the going
rate," a second trader said. "Thats why delivered
customer Midwest is at 9 (cents, or maybe higher)."
premiums rose to between 8 and 9 cents per pound May 10, up
from 7.5 to 8.5 cents per pound previously, with unconfirmed
reports of higher numbers in the market.
Market participants said that
the rise came as producers boosted their tags and as supply
from LME-approved warehouses remained constrained.
"We raised our prices recently,"
one producer source said.
One zinc alloy maker told
AMM that he was offered material from a warehouse
location at 9.5 cents but that he did not buy any.
There is no material available
in LME-listed warehouses in New Orleans for prompt delivery,
according to traders.
"You can pay a $10 premium for
warrants in LME warehouses, but you will also have to wait
about 10 months for it," the second trader said.
Market participants holding zinc
outside of these warehousesand therefore not stuck in the
queue to deliver material outcan command a much higher
premium now than that supply in the market appears,
SHG stocks in LME-listed
warehouses in New Orleans stood at 663,175 tonnes May 22,
437,350 tonnes of which are canceled, according to data from
the exchange. This compares with stocks of 797,350 tonnes May
While stocks in LME-listed
warehouses have declined thanks to the exchanges load-out
rules, which require warehouses to deliver out between 1,500
and 3,000 tonnes per day depending on the volume of material
stored in any given location, market sources noted that such
material is often moved to another warehouse rather than to
"Theres a small amount of
movement out of the (LME-listed) warehouses, but its just
going into other warehouses," the second trader said.
Meanwhile, inventories of SHG
zinc have all been removed from LME-listed warehouses in
Chicago, which started the year with 2,350 tonnes in stock.
As a result of the higher offers
for SHG, AMMs daily in-warehouse premium for New
Orleans has increased to a range of $90 to $110 per tonne from
zero to $35 per tonne previously.