As we saw happen in previous years, in 2014 we may see China once again playing a pivotal role in the global zinc market.
A report by the International Lead and Zinc Study Group said that China, after having remained relatively stable for the past four years, could step up production of refined zinc metal by 7.3 percent in 2014, and this could be the main reason for an overall increase in production of 4.4 percent to 13.46 million tons.
The forecast said that globally, zinc mine production was expected to go up by 2.6 percent this year to 13.57 mt as the output from China, followed by Australia, was set to rise.
Production by other Asian nations such as South Korea, currently the world’s third-largest producer of lead behind China and the US, and India and Kazakhstan was also expected to rise. Korea’s production specifically was likely to go up by 5.7 percent to 500,000 tons.
There will be a supply/demand deficit, like last year, too. Global demand for refined zinc metal will exceed supply in 2014, as in 2013. The ILZSG said the anticipated deficit will be 117,000 tons.
It is anticipated that, after having risen by 4.9 percent in 2013, world usage of refined zinc metal will increase by a further 4.5 percent to 13.58 million tons this year.
India, like China, is likely to increase its usage of zinc this year. Usage in China is forecast to rise by 5.8 percent. Europe and the United States may take up their zinc consumption levels by 3 percent and 1.7 percent, respectively. China, incidentally, uses about 44 percent of the world’s zinc.
In India, many analysts are bullish on zinc and see about a 10-percent upside in the next three quarters in keeping with the international trend. But if the Indian rupee continues to strengthen against the US dollar, there could be an adverse impact on the export of refined zinc.
China’s Cut of the Zinc Pie
Zinc is mined in more than 50 countries and is produced as metal and as compounds in about 40 countries — China, Peru, Australia, India and the US are the five largest producers of zinc in the world. While traditionally the US has been the biggest consumer of zinc, lately, because of the economic downturn, China is giving the US a run for its money.
The one factor that analysts here say needs looking out for is the anticipated demand/supply deficit that’s likely to shoot up from 2015-16 if fresh mine supply is not added.
Over the last few years, the Chinese, like with many other base metals, have largely scripted the global zinc story and that nation’s actions will obviously continue to affect international prices.
Come back Monday for our price forecasting team’s zinc price outlook.