Zinc Supplies, Demand, Likely to Balance in 1999, Group Says
London, April 23 (Bloomberg) -- Zinc demand in 1999 is
expected to grow enough to meet rising output, while health
concerns will restrain use of lead metal and leave a surplus in
the market, a research group said.
Consumption of zinc, which is used as a protective coating
for steel in the construction industry, will rise 2.2 percent to
8.05 million metric tons, the International Lead and Zinc Study
Group said. Robust demand from galvanizers and brass foundries
in the U.S., Europe and China will offset a partial recovery in
Korea and a decline in Japan.
Output of refined zinc is expected to grow by 2.1 percent
to 8.2 million tons, said the ILZSG, an inter-governmental
organization. The bulk of the rise will be seen in Korea, Japan,
Thailand, Iran, Kazakhstan and Australia.
Zinc prices, which have dropped 20 percent in the past 18
months because of weak demand in Asia, are likely to recover in
the months ahead as the construction industry picks up, analysts
forecast. Benchmark zinc prices today rose $8 to $1,053 a metric
ton on the London Metal Exchange.
Demand for lead, used mainly to make rechargeable car
batteries, will increase 2.3 percent to 6.12 million tons in
1999, after languishing virtually unchanged for two years, ILZSG
said.
Growth in Europe of just under 2 percent for the fourth
straight year, plus a 9.8 percent rise in Korea, will offset a
decline of 4.6 percent in Japan and a slowdown in growth in the
U.S. to 1.7 percent, from 4.5 percent last year.
Concern over the toxicity of lead poses the biggest threat
to the market, ILZSG said.
''One of the issues of greatest concern is the rapidly
growing tendency for governments to impose restrictions on uses
of metals without first establishing that the uses present
unmanageable risks to human health,'' the group said.
The European Commission is planning to ban using lead in
many new car parts and electronic equipment, ILZSG said.
Like zinc, lead prices are down about 15 percent during the
past year and a half as a result of a contraction in demand in
parts of Asia. Although lead prices are likely to recover,
analysts have said, they are more influenced by seasonal
factors; demand is stronger in freezing weather, when car
batteries need to be replaced.
Benchmark lead prices on the LME today rose $3 to $534 a
ton.
Refined lead output will rise 3.3 percent to 6.16 million
tons because of expansions in Canada and Australia, while an
investment at Australia-based Broken Hill Proprietary Co.'s
Cannington mine accounts for the bulk of a 2.1 percent rise in
mine output to 3.02 million tons. About 60 percent of refined
lead is recycled from scrap supplies.
--Andy Webb-Vidal in the London newsroom (44-171) 330 7743/tc
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