US secondary zinc alloy prices contracted in tandem with LME Zinc, despite strong demand for zinc alloy grades.
The official LME Zinc cash offers closed Tuesday at $1.1213/lb, declining from $1.1356/lb on September 15, while the official three-month LME Zinc contract surrendered some of last week’s gains and closed Tuesday at $2,490/mt, dropping by $34.50/mt from $2,524.50/mt on September 15.
LME Zinc’s current slide is an anomaly, said market participants, who remain bullish about market fundamentals. Moreover, some expect LME Zinc tags to surge to around $2,580-2,600/mt before peaking at about $2,800/mt.
The weekly Davis Index decreased by 0.9-1.9¢/lb across all Zamak grades. The index for Zamak #2 declined by 1.4¢/lb to $1.335/lb delivered US consumer on Tuesday, while Zamak #3 slipped by1.9¢/lb to $1.30/lb. Zamak #5 dipped by 1.1¢/lb and settled at $1.323/lb, and Zamak #7 decreased by less than a penny to $1.31/lb delivered on Tuesday.
The indexes for zinc alloys declined by 2.4-2.8¢/lb, depending on grade. The Davis Indexes for both ZA 8 and ZA 12 dropped by 2.8¢/lb to $1.341/lb delivered and to $1.361/lb delivered, respectively, while ZA 27 fell by 2.4¢/lb to $1.385/lb delivered US consumer.
The zinc alloy market is volatile, but producers noted robust demand stemming from ramped up automotive production. Zinc alloy demand is expected to strengthen through the remainder of the year, notwithstanding macroeconomic uncertainties like the possibility of COVID-19 infections rising, and the outcome of the US presidential election in November.