According to the London Metal Exchange (LME), zinc prices reached a series of decade highs by the end of 2017. The LME’s three-month zinc contract increased 27 percent from an average of $2,728/mt in January 2017 to an average of $3,413/mt in January 2018 .
During the latest International Zinc Association (IZA) conference, traders expressed concerns about new production coming online, rising transportation costs and uncertain demand in the Chinese market after the New Year holiday. Intensity of buys immediately after the holiday ends, according to some traders, is a precursor to their own economic situation and an indication of how the metal may trade for the remainder of the first quarter and into the second quarter.
Sources inform SteelOrbis that special-high-grade premiums in the US, on delivered terms, is higher by $0.0825-0.0925/lb ($182-204/mt) compared to the $0.0600-0.0650/lb ($132-143/mt) premium that was prevalent in mid-February of 2017. The premium correlates with the pricing against the LME contracts. Given the present premium range, the premium has increased by 38 percent on the lower end of the range a year ago to 42 percent on the higher end of the same range. While new production supplies as well as any potential Chinese economic faltering after the New Year may dampen prices slightly, transportation costs are expected to maintain the US premium through the summer.