Steel Products Prices North America

Zinc Prices Rebounding / Aluminum Close to 5 Year Low

February 18, 2014

Galvanized steel buyers need to be aware that zinc prices have been rising since the beginning of February. The metal is close to its one year high but still has a ways to go before reaching the level at which the domestic mills last raised coating extras on galvanized steels.

Zinc has been trading around $.94 per pound up from $.88 per pound posted at the beginning of the month. The price moves are being attributed to weakness in the U.S. dollar combined with perceived strength in the metal in China.

As you can see from the first graph below we are close to the 30 day high for the metal and also close to the one year high of approximately $.97 per pound.

SMU does not expect any changes in galvanized coating extras as the extras being used went into effect in January/February 2012 and the adjustments were made based on zinc prices from early 4th Quarter 2011. At that point in time (4Q 2011) zinc was trading at approximately $1.10 per pound on the LME spot market prior to any premiums which are charged to the mills for delivery.

When SMU last checked the premiums on zinc were $.076 to $.079 per pound for 2013. This year the zinc suppliers are trying to raise the premiums to as high as $.09 per pound. Coated steel buyers need to be aware that the domestic mills are being squeezed by the rising premiums which are charged to the mills to cover transportation, warehousing, marketing as well as revenue for the smelter.

Buyers should also be aware that LME zinc inventories have been dropping for the past year. There were slightly over 1,200,000 metric tons of zinc inventories in February 2013 and the latest data puts the inventory levels around 803,000 metric tons.

To put this into perspective, the low point for inventories over the past 5 years was approximately 302,000 metric tons.

Aluminum Pricing

For buyers of aluminized, Galvalume, Galfan and other steels coated with a combination of metals which include aluminum, those prices have been historically low having dropped to approximately $.73 per pound at the beginning of February. However, the current spot price of approximately $.77 per pound is above the low for the month ($.73 per pound) which was the lowest price point for the metal during the past 12 months.

You have to go back to Fall 2009 to spot the last time aluminum traded below $.80 per pound.

Aluminum inventories stand at approximately 5,371,425 metric tons which is down from the 5 year high levels of approximately 5,490,000 metric tons. The low point over the past five years was just shy 3,200,000 metric tons during February 2009.