European lead, zinc premiums steady as LME prices move higher
London (Platts)--19Dec2012/809 am EST/1309 GMT
European lead and zinc premiums were unchanged this week as prices on
the London Metal Exchange remained elevated with lead prices touching a year
high, market participants said.
Three-months lead hit a year-high of $2,347.75/mt in morning trade on
LMEselect Wednesday, however, some market players were hesitant to put the
move higher purely down to improved fundamentals.
"To be honest it's mostly the dollar movement, although lead, copper and
tin look better fundamentally," one European trader said.
The euro climbed to trade above $1.32 against the dollar Wednesday
morning, continuing to build on recent gains as the US fiscal debate remained
One producer source, who deals in lead, tin and copper, said that
contract negotiations for lead and tin are going well for 2013 "at similar
levels" to 2012, although copper was proving more tricky.
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"The fundamentals for lead look good, compared to the rest of the
metals, like tin," the producer said.
However, a second trader said that the fundamental picture for lead was
not as bullish as it had been at the beginning of the year.
"Looking at the physical market, the pressure has eased. There's enough
lead out there now," he said.
The second trader said that lead stocks on the LME were over 300,000 mt
and although it was difficult to get hold of material due to long queues,
material was still physically there.
Global LME warehouse stocks of lead stood at 335,750 mt Wednesday, down
2,400 mt from 338,150 mt Tuesday.
"Sometimes the market gets caught in a mindset. At the beginning of this
year the mood was set for tight supply, but what can happen is that as you
approach year-end with discussions for next year, you suddenly realize that
your earlier predictions might not actually be the case," the second trader
He said that from his perspective consumer panic surrounding lead
supplies was now over.
"Some of the pressure has come off now," he said.
He added that premiums were unchanged at $70-80/mt plus LME cash for
99.985% lead in-warehouse Rotterdam.
The first trader said that he was quite optimistic for lead next year.
"Scrap is expensive and batteries are needed. There will be good demand
next year," he said.
The first trader pegged premiums at $70-80/mt plus LME cash for 99.985%
lead in-warehouse Rotterdam.
However, the second trader was a little more cautious on the demand
outlook going forward.
"I can't see spot premiums doing anything exciting over the next few
weeks. Perhaps if we get a good cold spell there might be a seasonal pick-up.
However, there's a school of though that says if the cold hasn't kicked in by
the second week of January, then the seasonal uptick for lead probably won't
happen," he said.
Looking at the immediate market outlook a third trader was also bearish.
"I can't offer anything I'm afraid. The markets are dead."
Platts premium assessment for 99.985% lead in-warehouse Rotterdam was
steady at $70-80/mt plus LME cash.
Platts assessment of SHG zinc premiums were also unchanged on week at
$120-130/mt plus LME cash, in-warehouse Rotterdam.
Zinc stocks in LME warehouses dipped slightly Wednesday from Tuesday,
down a modest 1,525 mt at 1,227,175 mt.
Participants still see zinc heading in the same way as aluminium, with
large amounts of metal getting locked up in warehouse financing deals
creating artificial tightness and elevated premia.
--Greg Smart, email@example.com
--Ben Kilbey, firstname.lastname@example.org
--Edited by James Leech, email@example.com