Some buyers in Europe have agreed premiums of $155-165 for the supply of special high grade zinc in 2014, market sources told Metal Bulletin.

This represents an increase of about $20 over FCA Rotterdam premiums agreed for this year.

Traders and consumers have agreed the higher premiums for contracts covering portions of their requirements for next year, but the bulk of contracts are yet to be signed, the sources said.

European zinc supply will open up next year as Glencore cedes marketing control of European commodity-grade zinc produced by Nyrstar, which will market the material jointly with Noble from January under a new three-year partnership.

Consumers had hoped that new competition in the European market, as well as potential changes to LME load-out rules, would lead to a reduction in spot and contract premiums next year.

Offsetting this, though, is a tightening balance in the metal market, driven by recovering global demand and increasing metal imports in China seen in recent months.

It may take longer to settle contracts with all customers this year as a result of the new competition, but most contracts are likely to be settled at the $155-165 level, one producer said.

“I can confirm those levels, although not on the bigger volumes yet. Our deals have mainly been with consumers so far, and I think to some degree they have sat on the fence more than in previous years. I signed fewer contracts during LME week this time than I did last year,” the producer said.

“I’ve booked some tonnages with suppliers at that level, but it will take another two or three weeks to get everything wrapped up,” a physical trader said.

Mark Burton
Twitter: @mburtonmb