Platts reported that with demand for zinc still dormant, particularly from the steel mills, Platts price assessment for special high-grade zinc in the US inched lower this week to 2.85 cents plus LME cash from the long-standing 3-cent level.
In contrast, the premium for Alloy No. 3 hung on at 16 cents plus LME cash, as a spike this week in the LME zinc price sparked by China's roll-out of an economic stimulus package did little to lift spirits.
An alloyer source told Platts that "Everything is doom and gloom. One of the guys big steel mill about 2009 bids and they said, 'That's not what we're worried about right now; we're worried about paying bills. He said that we are in March and they haven't even sent out bids. One of my regular contacts hasn't bought anything in five months. He said he's closing down for the month of April and laying off."
The alloyer said his company's zinc producer in Canada is still quoting 3 cents for SHG. Producers can sell to the LME, so they don't have to go lower.
A consumer source told Platts that "We typically go to the market for our requirements for one year we're looking at what our requirements are going to be on a real-time basis. Our production requirements are so uncertain, because the market is so erratic right now and it's not fair to suppliers to commit to volumes that we might not be able to take. He added that until we have a production schedule, we have to take everything with a grain of salt."
Another alloyer said "SHG is probably around 3 cents. I haven't seen anything traded lower than that." Still, other sources said the SHG premium is trending a bit lower amid the slackening demand.
The alloyer said the demand crunch continues to spill over into the Alloy No 3 side, making for a very, very quiet market. We're selling the occasional truckload, which he said can still fetch a 17.5 to 18.00 cents premium, while longer term deals are being made at 16.5 to 17.5 cents depending on the volume, discounts that are born more out of necessity than desire.
Acording to Barclays Capital analysts, meanwhile on the LME, zinc prices jumped to about USD 1,245 per tonne late in the week, after beginning the week at around USD 1,101 per tonne a surge reportedly brought on by news that China's National Development and Reform Commission had announced additional spending on infrastructure and manufacturing, beyond the expenditures already outlined in a stimulus package unveiled in November. Three months zinc on the LME closed at USD 1,230 per tonne down by USD 13 from recent close.
An alloyer told Platts that but in the current abysmal market, few thought the zinc price rally would last. I don't know who believes this is going to stick because the market here is so bad. A trader agreed. "China is making everyone do short-covering. The price could go to the moon it won't last because the awful conditions will derail this commodities move. If China is serious about buying the commodities, the price could go up, but I don't think it will, because business is still very soft."
(Sourced from Platts)
