US zinc alloy premiums inch up this week; sellers cite higher costs
Washington (Platts)--27Apr2012/454 pm EDT/2054 GMT
US premiums on the zinc alloy product Alloy No. 3 rose modestly this week as sellers try to pass along some of their higher costs.
Platts' price assessment for Alloy No. 3 inched up to 17.25 cents plus LME cash, from 17 cents last week, while the price assessment for special high-grade zinc was steady at 7.25 plus LME cash.
"There's no fresh orders, it's still pretty quiet," an alloyer told Platts, "but our costs haven't changed so I'm not going to lower the premium." He said he sold a half truckload of Alloy No. 3 this week at a premium of 18 cents.
"More of [Alloy No. 3] is going at the higher numbers now," another alloyer said. "We're holding out for higher prices." He said he had sold "a couple thousand pounds" of the alloy in a single day this week and that premiums have been holding at 17-18 cents, adding that 18 cents is "the top end" of the range.
Another alloyer, who said he sold roughly half a million lb of material this week, said 18-cent premiums are becoming more typical, citing pressure from freight costs.
Still, market players said business remains subdued. "I wish more material was moving," an alloyer said.
Market participants put premiums on SHG in a range of about 7-8 cents, with no transactions heard below 7 cents. An alloyer said he bought about 500,000 lb of the material this week at a 7.15-cent premium. "The sellers we've been buying from have been at 7, some at 7.5," he said.
A zinc producer said he closed a contract deal for the balance of the year involving "a couple thousand tons" of SHG at premiums of 7-7.5 cents. As for spot sales, he added, "They're at 7-10 cents, depending on where [the buyers] are." The producer said he sold about 100 mt of SHG on the spot market this week.
A zinc trader said he is still selling SHG at 7 cents, but added that he saw some upside to premiums ahead, noting that gasoline prices typically peak near the Memorial Day holiday, pushing freight costs higher.
