Steel Products Prices North America

Analysis of Spot Zinc & Galvanized Coating Extras

August 14, 2014

With Nucor making a move and raising their coating extras, we decided to conduct a quick review of the LME spot zinc market going back to when the previous coating extra changes were made (prices were lowered) with the announcements being made just prior to January 2012.

First, we will take a look at the current zinc pricing situation. In late morning trading earlier today, LME zinc spot prices were $1.033 per pound which is actually the lowest level that the metal has seen over the past 30 days but still well above levels seen during calendar year 2013 and most of 2014 to date.

Looking at zinc pricing over the past year we saw the metal trading down to around $.83 per pound back in September 2013 and it has subsequently been moving higher from there. Zinc peaked at just under $1.10 per pound in late July. There has been almost a full 25 percent price move since the low in September.

Not considered in our calculations are the premiums being paid by the domestic steel mills which we have been told by one conversion mill run approximately $0.095 per pound.

The last time coating weight extras were adjusted was back in 4th Quarter 2011 (effective January 2012). If you look at the five year graph below you can see that between August 2009 and December 2011 we had some wild swings in spot zinc pricing. Because of those swings we had new extras announced for July 2010 (Nucor) and then again in January 2011 (Nucor). The circle indicates the period of time when extras were lowered to those which took effect in January 2012.

The Nucor announcement effective October 6, 2014 takes their extras back to those being used during calendar year 2011.