Here is some more Zinc news - though I don't understand the significance
Zinc 2012 treatment charge seen below $200/mt: sources
Palm Springs, California (Platts)--21Feb2012/603 pm EST/2303 GMT
As negotiations continued Tuesday on 2012 zinc treatment charges, industry sources at the International Zinc Conference said the 2012 benchmark TC/RC is likely to be settled below $200/mt, compared with a 2011 TC/RC of $229/mt.
But the 2012 TC/RC would be basis $2,000/mt rather than $2,500/mt in 2011, sources also said.
However, a number of sources close to the process doubted whether, if the 2012 TC/RC dips below the $200/mt mark, the fee would go over well with other zinc smelters.
"Below $200/mt looks to be the most likely settlement," an industry analyst said. "But the concern is that other smelters won't recognize it as the benchmark."
The analyst said zinc miners are reportedly pushing for a 2012 TC/RC at $185/mt-$195/mt. He added that zinc miner Teck Resources and smelter Korea Zinc are being cited as the parties most likely to reach a deal at the IZC meeting. The meeting concludes Wednesday.
But given a reportedly wide spread between miners' and smelters' respective starting numbers in this year's talks, some IZC attendees are unsure if any parties will be able to come to an agreement at this year's meeting, where the benchmark fee is usually settled.
"I sense that people won't be on the same page this year," an analyst said. "Last year, everyone was on the same page."
Another industry source said: "I do suspect that [the 2012 TC/RC] will settle below $200/mt. This is not a large decrease from the 2011 benchmark, when the new basis $2,000/mt is taken into account," he noted.
"You've got to re-base that $229/mt," he said, a process that involves taking the difference between the 2011 and 2012 basis prices -- $500 -- then applying 2011's fee escalator of 6% and de-escalator of 4% to shave $20 to $30 from 2011's TC/RC. Fee escalators and de-escalators revise the TC/RC upward or downward depending on fluctuations in the London Metal Exchange zinc price.
"To re-base [$229] using the upscale or downscale gives you two different numbers; one gives you $209 and the other gives you $200," the source said.
"If there's going to be a rollover [from the 2011 TC/RC] you'll be talking about $209 basis $2,000/mt. So to drop below $200/mt is not so severe, because you're talking about this re-base calculation," the source said.
"At this stage, all one can say is that it looks like terms may settle below the rollover," the source said, adding there was an unusually wide divergence between the 2012 starting points of between $170/mt and $260/mt, basis $2,000/mt.
Some analysts say zinc miners have a slight advantage going into the 2012 talks amid increasingly tight zinc supply. However, others argue that the supply/demand picture hasn't shifted significantly from 2011.
"I'm sure the miners will be saying that the market for concentrate is quite tight, but my reply would be that its because smelters have been producing too much metal," Macquarie analyst Duncan Hobbs told Platts in January.
