Last Updated :
21 August 2008 at 17:00 IST
Zinc: Production to surpass consumption
Commodity Online MUMBAI: Zinc, one of the hottest metals globally, is witnessing a peculiar problem. Production of
Zinc worldwide is project to surpass consumption. Result: zinc prices are falling day by day.
According to the International
Lead And Zinc Study Group, zinc demand outlook is going to be weak in the coming months with production expected to surpass the consumption by 175000 tonnes in 2008. Zinc production is forecast to continue to exceed consumption by around 240000 tonnes in 2009.
It says global zinc mine output rose by 9.2% over the first 5 months of 2008 compared to the same period of 2007. The most notable increases were in Australia, Bolivia, Kazakhstan, Peru, Portugal and the United States.
LME three month forward prices of zinc now trades at $ 1700 per tonne up $ 35. Resistances for the contract are at 1765 per tonne breaking which some momentum is expected in the prices northwards towards $ 1780 levels. Supports for the contract are at 1640 levels. MCX Zinc benchmark contract is trading at Rs 75 per kg. Resistances for the contract are at 75 levels with Supports lying at 71.50 levels.
Zinc inventories since the start of the year have increased from 88250 tonnes to 163825 tonnes, a rise of whopping 85%. During the month of August so far the stockpiles have gone up by 4% from 158375 tonnes on 1st Aug 2008.
India is one of the fastest growing regions of
Zinc consumption in the world. Indian zinc demand is likely to grow 12-15 percent per annum compared with the global average of 5 percent.
Growth in
Steel sector is the main factor behind the rise in domestic consumption as 70 percent of India’s zinc use is accounted by steel galvanizing. India hopes to become self reliant in zinc production by 2010. Industry estimates place that India’s annual production has to touch 14 ton per year by 2020 if it has to sustain 10 percent growth till 2010 and at 7 percent rate thereafter.
Zinc is the fourth widely used metal after steel,
Aluminium and
Copper in the world. Mainly used for galvanizing steel, zinc is also used in alloys, batteries, rubber, paint, electroplating metal spraying and several other sectors.
The rapid growth in the Asian region is mainly the trigger for rise in global zinc consumption. Refined zinc output globally is expected to grow by a moderate 3 percent to 10.6 million ton in 2006; it may further move up to 11.0 million ton in 2007. Major producers in Asia are enhancing capacity to in tune with the demand for zinc in the coming years.
MCX ZINC 30 March 2012
contract was trading at
Rs 102.1 . What's your view on it?
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