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Zinc premiums healthy in 2012 talks, buyers ask for optionality on volumes

December 23, 2011 - 09:06 GMT Location: London

KEYWORDS: zinc prices , zinc premiums , 2012 contracts , optionality for buyers

Zinc producers and traders have secured stable premiums in 2012 contracts struck with European buyers, but some consumers have asked for optionality on supply volumes, fearing further demand deterioration.

Contract zinc premiums have been set at similar levels to those seen in 2011 despite recent softness in spot premiums caused by weak demand and the backwardation in nearby London Metal Exchange zinc spreads, sources told Metal Bulletin. “The backwardation has probably forced a few traders to take lower premiums but the drop hasn’t been too dramatic,” a physical trader said. “I would say premiums have fallen perhaps or $5 or $10, and I don’t expect them to move much lower,” an analyst added. Metal Bulletin European zinc premiums were $125-135 per tonne on Friday, down $10 from November 25. The backwardation in December-January spreads, widely said to have been orchestrated by a long-positioned bank, eased out this week as the December contract became prompt. “I don’t think there were too many shorts out there caught up in the squeeze, and...

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