Market Data
May 2, 2014
Steel Buyers Basics: Cost to Put Zinc on Galvanized Steel Sheet
Written by Mario Briccetti
The following article is a continuation of our Steel Buyers Basics series written by Mario Briccetti. Mario is Principal of Briccetti & Associates, a Supply Chain consulting firm, and can be reached at Mario@mbriccetti.com
In my series of articles, I have stressed that buyers should have the best information possible in order to effectively negotiate pricing – Information is Power. This article describes how a buyer can calculate the cost of just the Zinc metal on galvanized steel sheet. Of course there is also the cost of processing but changes in the extras for different gauges and coating weights are driven by the changes in the ingot price of Zinc.
Zinc is a commodity metal (just like silver or aluminum). Worldwide, buyers and sellers set Zinc’s price in an open auction on the London Metals Exchange (LME). The ingot price for Zinc is published each day on the LME’s website and is expressed in $/metric ton. The price Steel Mills pay for their Zinc ingot is set by the LME’s price and, the price of Zinc can be highly volatile. (Note, most Mills try to smooth out Zinc price volatility by hedging it on the futures market.)
