The London Metal Exchange is considering adding to its listings zinc strip jumbos -- the larger-dimension product mainly used by steel galvanizers -- made with special high-grade zinc, and is weighing the move's pros and cons.
"We've had this debate for about a decade," said Oliver Nugent, research analyst with LME.
Speaking at the International Zinc Association Roundtable on Wednesday in Pittsburgh, Nugent noted a number of advantages in including jumbos as part of the LME system.
Jumbos would gain preferential rates of financing, and an LME-listed jumbo standard could prompt an industry push toward a common production and consumption model, he said.
Also, the addition would give the product access to LME's "market of last resort," while increasing the physical liquidity for LME zinc, Nugent added.
On the downside, he said, fewer zinc consumers can use jumbos as opposed to SHG slab. For example, zinc diecasters typically cannot use the larger-size products, so there is the risk of "alienating" that class of consumers, he noted.
Nugent said LME is seeking industry input to help the exchange make a decision whether to add the new listing, but noted it would not commit to a timeline for a final determination.
"We'll take as long as we need to take," he said.
A zinc producer attending the IZA conference said he was all for the move.
"It would give clarity so producers and consumers would be speaking the same language about zinc jumbos and slab," he said.
