The unrelenting and unpredictable escalation in energy prices has put US Zinc in a difficult position in serving our customers due to the significant impact on production costs for Zinc Oxide.
Energy prices have been on the rise for 3 years and the recent hurricanes in the Gulf have further increased the upward volatility. Due to the tight supply and demand characteristics and the potential for more supply disruptions (political or natural), the high prices of natural gas and crude oil show no signs of receding. For the last few years, US Zinc has analyzed all potential options to offset the large impact of energy prices. Our two plants have focused on reducing operating costs, increasing recoveries, and alternative energy sources.
Effective with 10-1-05 shipments, US Zinc has no choice but to implement a natural gas energy surcharge that will appear as a separate line item on your invoice and price letter.
The ZnO surcharge will be based on the NYMEX Natural Gas Henry Hub final settlement price as defined by the NYMEX Exchange at the close of regular trading three business days prior to the first calendar day of the delivery month.
Example:
September settlement: $10.85/mmBTU
Surcharge adder (see attachment): $.0153/#
Hypothetical Base Price: $.7600
Total October Price: $.7753
This surcharge will remain in effect until further notice and you will be notified in writing every month on the NYMEX settlement price and actual surcharge. You can obtain the NYMEX Natural Gas Settlement Price from various websites (www.nymex.com/index.asp), the Wall Street Journal, and soon at www2.uszinc.com.
At this point US Zinc is analyzing the cost of crude oil and its relationship to our freight costs. At this point no decision has been reached on a fuel surcharge.
We appreciate your understanding during these difficult economic times. We are committed in providing the highest quality Zinc Oxide, exceptional customer service, and value.
For any questions please contact your US Zinc sales representative.
Printable Natural Gas Surcharge Form