US zinc secondary alloys prices dropped for the second consecutive week on Tuesday on declining LME Zinc prices.
The official LME Zinc cash offers closed Tuesday at $1.2472/lb, down from $1.2651/lb last week, while the official three-month LME Zinc contract fell by $50/mt from last week, closing Tuesday at $2,772/mt from $2,822/mt on Dec 22.
The market has remained quiet during the holiday season as buyers and suppliers take stock of where prices could head in January before deciding on further transactions. Market participants have been expecting a correction in zinc alloys prices that were rising in tandem with LME Zinc to levels that were being viewed as unviable by some buyers and suppliers.
Demand remains robust, however, and is expected to strengthen further in January as the steel and automotive industries ramp up production and capacities. Although, the rising COVID-19 infections and slow distribution of the vaccine could moderate the pace of growth over the next few months, according to some market participants.
The weekly Davis Index for Zamak #2 declined by 1.4¢/lb to $1.474/lb delivered US consumer. Zamak #5 fell by 1.9¢/lb to $1.456/lb delivered, while both Zamak #3 and Zamak #7 dropped by 2.2¢/lb to $1.438/lb delivered on Tuesday.
The index for ZA grades saw larger declines. ZA 8 decreased by 1.3¢/lb to $1.494/lb delivered US consumer, while ZA12 dropped by 2.6¢/lb to $1.504/lb delivered. ZA 27 decreased by 3.5¢/lb to $1.513/lb delivered US consumer.
Consumer purchases may pick up again in January on the back of current price corrections and as manufacturers increase their production volumes. Some market participants are also optimistic about demand driving sales, despite higher prices, in Q1 and Q2 2021.