Hindustan Zinc sees demand reviving
Mon Feb 2, 2009 3:59pm IST
in.reuters.com
By Ruchira Singh
MUMBAI (Reuters) - Leading Indian zinc producer Hindustan Zinc Ltd expects stable demand for zinc and lead in 2009/10 followed by a pick-up as infrastructure construction recovers, a top company official said on Monday.
Demand for base metals slumped worldwide in 2008 with a global banking crisis and slackening industrial activity, particularly in the world's largest consumer, China.
Consumption of zinc, mainly used in the making of steel, has been hit by slowing construction activity and weak sales of autos and consumer goods.
On Monday, London Metal Exchange three-month zinc traded at $1,125 a tonne, down 54 percent from a year earlier.
Hindustan Zinc's chief operating officer, Akhilesh Joshi, said the firm was operating at its full capacity of 754,000 tonnes per annum, and was on track to expand capacity to 1.06 million tonnes by March 2010.
The company's financial year runs from April to March.
"2010 will be the year when we can see the growth in consumption, both domestic as well as global," Joshi told Reuters in a telephone interview from his office in Udaipur in the western state of Rajasthan.
"Because economies the world over are stabilising, global demand for zinc and lead is expected to start increasing by 2010," Joshi said.
A Reuters survey of 57 base metals analysts in January forecast prices of base metals -- including lead, nickel, tin and zinc -- are likely to plummet before massive economic stimulus packages announced worldwide kick in and support prices from 2010.
A unit of UK-based Vedanta Plc, Hindustan Zinc has seen its profits fall in 2008/09, but the firm has stepped up its metal production anticipating demand to resume and looking to lift its market share.
The company aims to be one of the lowest cost producers of zinc in the world and expects its cost of production to fall in the quarter ending in March, from $668 a tonne without royalty in the December quarter.
"Towards the end of Q3, the downward trend in the unit cost of key inputs became visible, and is expected to lower the cost of production going forward," Joshi said.
The company is aiming to raise its presence in overseas markets even as big base metals producers, unable to sustain the fall in prices, cut output.
"We have it in our hand to increase the volume and decrease the cost," Joshi said. "We are not going to cut production at all ... we have to get new clients."
Hindustan Zinc exports about 20 percent of its output. |
