Japan Zinc Smelters to Hike Premium by Over 2,500 yen/t

Japanese zinc smelters are likely to conclude the zinc ingot premium price negotiation with the contract users to increase by averaged 2,500 yen per tonne for the year to March 2008. The users including steel makers will accept the hikes for 5 years in a row for stable supply under tight ingot market. The zinc ingot premium on ingot price at London Metal Exchange increased by 5,000 yen per tonne in 2005, which was the widest hike ever. World largest producing country of China turned into net import to meet growing domestic demand. Chinese import made world zinc ingot supply tight along with zinc ore tight supply due to delay of mining development compared with zinc smelting. International Lead Zinc Study Group (ILZSG) estimates zinc ingot production was 10.732 million tonnes in 2006. The supply was 332,000 tonnes short for 11.064 million tonnes of consumption. Japanese smelters increased the zinc ingot premium by around 3,500 yen per tonne in 2006 under tight supply.