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Tight zinc supply pushes premiums up

Keywords: Tags  zinc, zinc premiums, special high grade zinc, Everdeen Mason

NEW YORK — A tight zinc supply has caused delivered premiums to inch higher, market sources told AMM.

Delivered premiums for special-high-grade zinc tightened to 9 to 10 cents per pound Aug. 1 from 8 to 10 cents previously.

"It’s certainly not very active in terms of buying," a zinc producer source said. "There doesn’t seem to be a lot of metal though."

Several trader and producer sources claimed that a production disruption at one company was causing the supply constraint, but AMM could not confirm any issues among producers.

Stocks of zinc in London Metal Exchange-registered warehouses in the United States fell 2.7 percent to 766,725 tonnes by July 31 from 788,075 tonnes two weeks earlier, when 80,075 tonnes of metal was delivered into New Orleans, according to the most recent LME data.

Although spot demand is seasonally weak, there is a lot of contract business taking place at premiums that are "at the high end of the range," the zinc producer source said.

Spot zinc activity is expected to ramp up by mid-September, market participants said.

"The economic data coming out has been strong, and it’s reflected in the dollar strength," a source at an alloy maker told AMM. "Business is certainly better, but not as good as it could be."

Contrary to other sources, he said delivered premiums for special-high-grade zinc can be under 8 cents per pound. "Business is not enough to drive the price of premium up, but it’s good enough to keep it from going down," he added.

Zinc alloy delivered premiums remain unchanged.

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