Where Indian Analysts See The Zinc Market Headed

Over the last few years, the world story of zinc has also largely been the story of China, and like in many other base metals, this year, too, all eyes will be on this huge consumptive nation where zinc demand and price movement are concerned.

A report just out by the International Lead and Zinc Study Group (ILZSG) states that in 2012, the demand for zinc was below its supply, though the pickup did gather some steam in the third quarter.

A press release issued by the ILZSG said that based on the provisional information it had gathered between January and November 2012, it was clear that the supply of refined zinc metal had exceeded demand by 267,000 tons. Global zinc mine output increased by 7.1 percent compared to the corresponding period in 2011. This was mainly driven by a significant reported rise in China of 20.2 percent.

Reductions in refined zinc metal production in Brazil, Canada, China, India and South Africa more than balanced the rises in Japan, the Republic of Korea, Peru, the United States and Uzbekistan, resulting in an overall fall in global output of 3.4 percent, the report added.

Towards the end of 2012, though, demand for this base metal did pick up, said the group, but only marginally.

But all that was last year.

The world over, analysts are hopeful that 2013 will be overall a good year for zinc. The early signs are there.

China’s economy is already showing signs of stirring up. A report by Platts stated that after being a consistent price underperformer last year, zinc looks a bit more bullish in 2013, based on trends in the base metal’s largest consumer, China.

However, on the zinc mining side — as opposed to the refined zinc market — some analysts warn that China is likely to proceed full throttle with mined production, as zinc prices above the $2,000-per-ton mark are sufficient for producers to make money.

A market analyst with FCStone said the base metal looked somewhat better than it did, as Chinese production levels seemed to have moderated.

Indian zinc analysts give zinc more than 60 percent chance of recovery in 2013.

According to experts at analytical firm Aditya Birla Money, zinc prices had risen by over 12 percent in 2012 on a year-on-year basis. They, too, are banking on the Chinese economy’s revival for that crucial impetus in price movements, saying they remained bullish on zinc prices for this year.

By Sohrab Darabshaw