Zinc

[basserdan]

Zinc Deficit Set to Continue in 2007

By Biju Thomas
03 Aug 2007 at 10:32 AM

MUMBAI (CommodityOnline.com) -- Compared to the previous year, zinc prices shot up about 140% in 2006 due to the increased usage of the metal. Economic growth in Asia, especially in China, is the main factor for the recent hike in the metal consumption.

According to the International Lead and Zinc Study Group (ILZSG), the world zinc market would record a significant supply deficit this year. Global demand for zinc would rise by 4% to 11.45 million tonnes, while refined production would increase by 6.9% to 11.40 million tonnes.

The consumption of zinc has been increasing along with the industrial and economic developments in the world.

The industrial usage of zinc consists mainly in manufacturing galvanized sheets, electroplating, metal spraying, electrical fuses, batteries etc. It is also widely used in electric services, petroleum refining and crude petroleum and natural gas extraction.

Zinc follows steel, aluminium and copper among the widely used metals in the world. Due to its high degree of resistance to non-acidic atmospheric corrosion, zinc is instrumental in extending the life of buildings, vehicles, ships and steel goods and structures of every kind.



Factors Influencing Zinc Market

* Inventory level at LME warehouses
* Economic growth rate of major consuming countries
* Global growth and demand in major consuming industries
* Prices of the alternative metal



Zinc Outlook 2007

Global zinc mine out put is expected to increase by 9.4% to 11.35 million tonnes, due to increase in production from a number of countries including Australia, Canada, Peru, the Russian Federation and the United States.

Global demand for refined zinc metal is forecast to increase by 4% to 11.45 million tonnes; Chinese demand is predicted to rise by a further 8.4% due to expansion in the galvanized sheet sector. Increase in consumption is also expected from India, Japan, Taiwan and Thailand.

Scrutinizing the factors, it looks the global refined zinc market should remain in deficit in 2007, with usage exceeding supply by more than 40,000 tonnes.

Based on LME price movement $4000-4200 acts as a major supply zone followed by $4500-4600 where as $2800-3000 is the demand zone.

By arrangement with www.commodityonline.com. Biju Thomas is Head, Commodity Online Research.

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