SPOTLIGHT: Unlike aluminium, physical market will support zinc premiums if incentives end

Regional zinc premiums are likely to remain supported, even if the incentives that warehouse companies have offered to attract metal towards the back of the queues in Vlissingen, Detroit, New Orleans and Antwerp drop or are withdrawn altogether.

Zinc shares the characteristics of oversupply, loose contangoes and low outright prices that have made aluminium a favoured metal for carry-trade financiers, and, as in the aluminium market, their appetite for metal has supported physical zinc premiums over the past couple of years. But unlike aluminium, zinc premiums are unlikely to drop dramatically if warehouse companies stop incentivising those financiers to post collateral in backlogged locations. This is because, firstly, incentives for zinc have not risen so far as they have...


Mark Burton

July 24, 2013

13:00 GMT