Fuel is a part of the cost, and there may be continued pressure on oil," one metals trader said. "There is also a risk factor involved," he added, referring to the current Middle East focus on Iran that has helped push crude oil prices past $70 a barrel.

"Basically, three years ago $400 was your truck cost," he said."Now, that's probably $700. This is a cost that has to be passed along. When premiums go up, part of that is trucking."

Having finally found some solace in softening natural gas prices, metals producers must still contend with escalating freight costs.Freight is a greater cost than natural gas," one alloyer said. The difference is greatest with zinc, which consumes less natural gas than aluminum, he explained. "Every delivery is a separate entity, so we can see freight differential from week to week." For example, a delivery that cost $1,600 this week could be $1,650 or $1,675 the next.

"Our freight costs are higher than our gas and melting costs," a second alloyer said, explaining that he is twice vexed because he trucks in raw materials and trucks out finished products.
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The Short Term Energy and Summer Fuels Outlook issued last week by the Energy Information Administration, Washington, predicted diesel fuel would average $2.62 per gallon for the summer (April through September) season, up 21 cents (8.6 percent) from 2005. Diesel is expected to average $2.59 per gallon this year compared with $2.41 in 2005, an increase of 7.2 percent. This followed a jump of 33 percent from $1.81 per gallon in 2004, according to the EIA.

Diesel prices continue to trend upward in most states, according to figures provided by the American Trucking Association (ATA), Alexandria, Va.

Capacity concerns are another fly in the ointment for trucking activities. "There are times you have struggled to get a truck," the second alloyer said.

Immediate needs sometimes result in higher fees. "At a price, you can always get a truck," he said.

Spot premiums for special high-grade zinc have been as reported as high as 10 cents a pound compared with 7 or 8 cents for contract business. In addition to market tightness, part of the extra cost can be shipping.

Some routes also cost more. "To some areas there is not much backhaul, and if it has to be flatbed that can be tough," the first alloyer said. "Somebody's going to have to pay for that cost," he said. Increased volumes in the flatbed group have led to greater capacity demands, according to the ATA.

Alloy premiums have firmed 0.5 to 1 cent a pound across the board, with premiums reported at 16 cents a pound for die-casting alloys Nos. 3 and 7; 17 cents for No. 5; and 18 cents for No. 2, market sources said. Premiums for zinc-aluminum foundry alloys were reported at 18 cents a pound for No. 8, 21 cents for No. 12 and 28 cents for No. 28.