Zinc supply to overtake demand as China boosts output
ZINC supply will exceed demand by ‘‘ just under’’ 250,000 tons in 2008, driven by increased production in China, the world’s largest consumer and producer of the metal, the International Lead and Zinc Study Group says.
There will be a shortfall of 47,000 tons this year, the Lisbon-based group said in a statement. Chinese consumption will rise 8.8 per cent this year, boosting global demand by 3 per cent to 11.5 million tons this year.
The global demand growth rate will be 5.1 per cent next year as China expands use by 12 per cent, according to the group. US zinc demand will fall 1.9 per cent this year and European demand will rise 2.5 per cent.
China’s net exports of refined zinc will be a similar level in 2008 to this year because of ‘‘ increased domestic demand’’, the group says, without giving an exact number.
Increased demand has shrunk metal stockpile monitored by the London Metal Exchange 32 per cent this year. Prices have fallen 30 per cent in the same period on concern that production from new mines will flood the market.
Zinc mine output will rise 7.4 per cent this year to 11.2 million tons, and 9.5 per cent to 12.24 million tons in 2008, the group says. Refined metal output is forecast to rise 5.9 per cent to 11.32 million tons this year, and a further 7.8 per cent to 12.2 million tons in 2008.
There will be an 89,000-ton shortfall in the production of lead this year, the group says.
China is discouraging output of metals by reducing or scrapping tax benefits for exporters, as part of an effort to curb a record trade surplus. It imposed a 10 per cent tax on lead exports from June 1.
Chinese demand for lead will rise 17 per cent this year and 10.2 per cent next year, the ILZSG says.