Zinc Fees in Europe Said Little Changed in the Past Month

Buyers of zinc in Europe are being offered metal at premiums little changed from last month, according to three traders with direct knowledge of the sales.

The premium in Europe is $100 to $120 a metric ton, according to the median estimate of the traders, who asked not to be identified because they’re not authorized to speak to the media. That compares with $120 in January and $115 in December, according to Barclays Plc.

The premium is on top of the price of metal for immediate delivery on the London Metal Exchange and is for special high-grade zinc from warehouses in Rotterdam. The metal is used to protect steel from corrosion.

About 84 percent of zinc stockpiles in LME-approved warehouses in Europe are located in Antwerp, Belgium. At the current LME minimum delivery rates, it may take as long as 29 weeks to remove metal from the location, according to Bloomberg calculations. The wait times may become an issue in two or three years’ time and traders may be buying metal in anticipation of higher premiums on the back of that, according to London-based researcher CRU.

“The European market is pretty much balanced,” Graham Deller, an analyst at CRU in London, said today by phone. “The key dynamic isn’t that if you need to get hold of the LME metal, you need to wait six months. The merchants are taking a gamble on what the premium is going to be at some point in the future.”

The premium for zinc collected at sellers’ premises in northwestern Europe was at $135 a ton in January, compared with $130 a ton between October and December, according to data from Macquarie Group Ltd. The regional fees “have been fairly steady,” Duncan Hobbs, an analyst at Macquarie in London, said by e-mail yesterday.

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