Prices
Zinc Prices Manipulated Since 2010?
Written by John Packard
May 27, 2014
There are questions about potential manipulations of zinc and zinc trading which may have artificially inflated the metal’s price since 2010. Zinc, which is the metal used to coat galvanized steel as well as Galvalume, Galfan and ZAM, is believed to have been manipulated by The London Metal Exchange, Goldman Sachs, JP Morgan, Glencore Xstrata and its Pacorini Metals USA LLC unit and Metro International Trade Services, the metal warehousing of Goldman Sachs.
In a lawsuit filed on Friday in the Southern District of New York, is similar to one filed previously related to the manipulation of the aluminum market in the United States.
The basics of the lawsuit claims the companies manipulated LME rules to make sure that there were long waits for the release do zinc from warehouses. The companies are also accused of shuttling the metal between warehouses for no reason other than to, “cause and exacerbate anticompetitive effects.”
The impact of these actions have caused zinc prices to soar with galvanizing mills being hit the hardest through the premiums they have to pay in order to get delivery of the metal (approximately $0.10 per pound on top of the spot price).
According to a TodayOnline.com article, the London Metal Exchange warehouses in New Orleans hold 80 percent of the zinc in the exchange-registered stockpile. The article identifies Pacorini as operating most of the warehouses in New Orleans.
The lawsuit was filed by Duncan Galvanizing Corporation of Everett, Massachusetts and seeks class action status.
There was no trading of zinc on the LME on Monday. As of the end of this past week the zinc spot price was trading at $0.9438 per pound. This is at the higher end of the range over the past 6 months when zinc traded from $0.84 to $0.97 per pound.
John Packard
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