Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

US zinc secondary alloy prices increased on Tuesday for the second consecutive week by around 2-4¢/lb, which is in line with the uptrend on LME zinc.


LME zinc continued climbing this week despite rising inventories in its warehouses. The official LME zinc cash offers closed Tuesday at $1.1106, moving up from $1.0755/lb on August 11, while the official three-month LME zinc contract rose by $80.50/mt to close at $2,469/mt on Tuesday, from $2,388.50/mt on August 11.


The weekly Davis Index increased by 2-4¢/lb across all Zamak grades. The index for Zamak #2 increased by 2.7¢/lb to $1.33/lb delivered US consumer on Tuesday, while Zamak #5 rose by 2.9¢/lb to $1.315/lb delivered. Zamak #3 and Zamak #7 both rose by 3.4¢/lb to $1.30/lb delivered on Tuesday.


The indexes for zinc alloys climbed slightly higher than Zamak grades, rising by 3-4¢/lb, with ZA 8 witnessing the biggest movement of all alloy grades. The Davis Index for the material moved up by 4¢/lb to $1.35/lb delivered US consumer. ZA 12 rose by 3.7¢/lb to $1.37/lb delivered on Tuesday, while ZA 27 increased by 2.7¢/lb to $1.39/lb delivered.


Market participants attributed the consistent rise in prices to the construction boom in the US and positive market sentiment, as the economy picks up steam. Others expect base metal prices to move up in tandem with LME, which could affect prices for scrap and zinc alloys that are closely tied to LME Zinc movements. 


Moreover, a strong market in China also signifies rising non-ferrous exports. Domestic supply and demand could ride this trend and create upward price pressure, some market participants said. In the interim, stronger demand and more customer inquiries for different alloy grades are driving up domestic zinc alloy prices.


However, some zinc alloy producers cautioned that current trends could be a case of too much, too soon, as challenges such as high unemployment and rising COVID-19 cases are persistent concerns. The US, which is fewer than 80 days away from its next Presidential election, will see politics playing a huge role in market movements over the next couple of months.


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