Zinc Spot Prices Closing in on $1.05 Per Pound

We are now at levels not seen since 2011 when the spot zinc pricing exceeded $1.10 per pound which resulted in the current galvanized coating extras being put into place in early 2012.

The spot prices referenced do not take into account premiums the galvanizing mills have to pay in order to get delivery of material. One of the conversion mills told SMU that the current premium being paid is $0.092-$0.095 per pound (less than 10 cents but higher than the 7 cents charged a year or so ago). Steel buyers need to be aware of the premiums being paid and add them to the LME spot pricing in order to get a better sense of the true mill costs.

Zinc inventories have been plummeting. We have seen LME inventories drop from 684,625 metric tons on the 16th of June to 559,975 metric tons. When looking at the recent cycle, we saw zinc inventories peak at the end of 2012 at just over 1,200,000 metric tons.

Zinc is not the only metal to see prices moving. Aluminum has moved from a low of $0.78 per pound less than 60 days ago to its current level of $0.88 per pound. Aluminum, however, is nowhere near its five year highs when it exceeded $1.20 per pound. The metal is still trading below both 2013 and 2012 highs. Aluminum inventories are beginning to decline. Aluminum inventories on the LME are down some 28,000 metric tons over the past 60 days.