Bloomberg reported that the premium agreed between zinc buyers and sellers for deliveries this year in Europe climbed amid improving demand and speculation supplies are limited.

According to six people who trade the market, the premium is about USD 160 per tonne for special high grade zinc loaded in Rotterdam. The surcharge, which includes import duty into the European Union, compares with USD 130 to USD 135 for last year. The people cited trades in ranges between USD 140 and USD 180.

Financing, which takes advantage of a market in contango, is still attractive and some suppliers have been shipping to China, the biggest consumer of the metal, to capitalize on higher premiums there. Zinc stockpiles in European warehouses monitored by the London Metal Exchange halved since June and are the lowest since October 2012.

Mr Robin Bhar an analyst at Societe Generale SA in London said that “It’s the new landscape we find ourselves in, which is stock financing and warehouse games, mixed in with undoubtedly an improving fundamental market for zinc. We’ve had a market that’s already moved into deficit on the refined metal side.”