Dr. Hanish Kumar Sinha
is Head, Trade and Commodity Intelligence Group, National Collateral Management Services Ltd.
There is no shortage of refined zinc at the moment. World supply will outpace demand this year by 161,000 tonne compared with a surplus of 264,000 tonne last year, according to the International Lead & Zinc Study Group.
According International Lead and Zinc Study Group the global refined zinc metal market was in surplus by 223 kilo tonne during the first half of 2011. Over the same period total reported stocks rose by 297 kilo tonne.
In June the gap between production and usage narrowed sharply mainly due to a rise in global demand. A rise of 3.4 per cent in world zinc mine supply compared to the first half of 2010 was principally a consequence of increased output in China, India, Finland and Mexico which more than balanced lower production in Canada and Peru. Increases in Belgium, China, India and Peru were the main factors influencing a rise in world refined zinc metal production of 3 per cent.
Despite a decline in the United States of 5.4 per cent, global demand rose by 2.4 per cent. This was mainly influenced by increases in Europe and China of 5.6 per cent and 3.7 per cent respectively.
Nearly 50 per cent of the amount is used for galvanizing to protect steel from corrosion. Approximately 19 per cent are used to produce brass and 16 per cent go into the production of zinc base alloys to supply e.g. the die casting industry. Significant amounts are also utilized for compounds such as zinc oxide and zinc sulfate and semi-manufactures including roofing, gutters and down-pipes.
Global zinc usage is forecast to rise by 11.3 per cent in 2010 to 12.05 million tonnes after declining by 24.5 per cent in 2009 demand in Europe is expected to rise by 21.6 per cent this year. Chinese demand is expected to grow 8.9 per cent due to infrastructure projects and auto growth.
In India, about 70-75 per cent zinc gets consumed in the, galvanizing sector i.e., galvanizing of steel sheets, structures, pipes, wires, fasteners, jobbing items etc.
The balance zinc gets consumed in zinc die casting, dry cell batteries, alloys, chemicals etc.
The huge investments in highways and urban development lead to more and more of galvanized guard rails/crash barriers, street lamp poles, high mast lighting columns & signals. Similarly the increasing penetration of mobile phones in smaller cities and rural areas, after it’s successful acceptance in metro cities, have brought in more and more galvanized telecom towers. The investments in increased power generation have resulted in more power transmission line networks across the country. The new airport terminal buildings and upgrading of existing airports, seaports etc., require galvanized steel sheets for air-conditioning ducting.
The increasing investments in power & telecom also require more galvanized cable trays. There is also an increased wind mill generation capacity in the country and the wind mill towers are usually galvanized, to obtain a long service life.
Thus the future of zinc market is very bright, though for the short term zinc is expected to be marginally bearish.