Zinc sup­ply to over­take de­mand as China boosts out­put

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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.

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