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Special high-grade zinc premiums tumble

Keywords: Tags  zinc, zinc premiums, SHG, special high-grade zinc, zinc prices, Everdeen Mason

NEW YORK — Special high-grade zinc premiums fell this past week amid slower demand, traders and consumers said.

AMM’s delivered premiums for spot zinc decreased to 8 to 9 cents per pound Sept. 26 from 9 to 10 cents previously.

Market participants attributed the slowing in demand in part to a potential U.S. government shutdown looming over the country as a divided Congress debates whether to increase the debt ceiling.

"With so much going on on the political front, it’s making people hesitate just a little hoping for cheaper prices," an alloy producer said, referencing the debt ceiling issue being discussed in Congress.

Cash zinc prices on the London Metal Exchange have risen over the past week to $1,880 per tonne (85.3 cents per pound) Sept. 27. Prices tumbled to $1,793 per tonne (81.3 cents per pound) in July, when many customers were purchasing for the fourth quarter, the alloyer added.

"It won’t pick up until they fix premiums for next year," he said.

But zinc prices are expected to be higher in 2014, a second alloyer said, referencing ongoing queues at LME-listed warehouses.

"Even though LME stocks are coming down, it’s just going to other warehouses," he said.

Zinc stocks have decreased steadily throughout September, with most metal leaving New Orleans and occasionally Baltimore. U.S.-based warehouses held 708,275 tonnes Sept. 25 compared with 724,075 tonnes Sept. 2, according to the most recent LME data.

Meanwhile higher copper prices have bumped up zinc alloy No. 2 premiums, several alloy makers told AMM.

"(Most) alloy prices are hovering at the same levels and we hoped it would come down," a third alloyer said. "But No. 2 is higher because of the price of copper."

No. 2 zinc alloy contains between 2.6- and 3.3-percent copper, a higher percentage than most other alloys.

AMM’s premium for zinc alloy No. 2 rose to 25 to 27 cents per pound Sept. 26 from 23 to 25 cents per pound previously. Comex copper for December, the most actively traded contract, settled at $3.3070 Sept. 27, up from around $3.20 on Sept. 13.

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