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Strategies & Market Trends : Commodities - The Coming Bull Market -- Ignore unavailable to you. Want to Upgrade?

To: craig crawford who wrote (145)	6/7/2001 12:43:33 AM
From: craig crawford	Respond to of 1643

Lead - Outlook for 2001 Demand 3.It is expected that, in 2001, consumption of lead will rise by 1.1% worldwide to 6.57 million tonnes and in the West by 0.2% to 5.66 million tonnes. 4.Present projections indicate that lead demand will not be affected by the present economic downturn as much as a number of other commodities. This relates to the fact that its major end user market is replacement lead-acid batteries, a sector that is generally not as sensitive to economic fluctuations as other industries. 5.Demand in the United States and Europe in 2001 is forecast to be at a similar level to 2000. In Asia, a rise of 3.5% is expected, primarily due to further growth in Chinese domestic demand. Supply 6.A forecast rise of 2.9% to 3.03 million tonnes will result in global lead mine output exceeding 3 million tonnes for the first time in 2001. In the Western World, an increase of 2.2% to 2.27 million tonnes is anticipated. 7.Further reductions in the United States will be mainly as a result of additional cutbacks at Doe Run’s Missouri mines. Canadian output is also expected to be lower, principally due to the closure of Cominco’s Sullivan operation. These decreases will, however, be more than balanced by further rises in Australia, China, Ireland and Mexico. 8.World supply of refined lead metal is forecast to increase by 0.9% to 6.64 million tonnes in 2001. In the Western World, however, a fall 0f 0.2% to 5.06 million tonnes is expected. 9.A rise of 1.6% in Europe will be mainly a consequence of a significant recovery in UK production after cutbacks at Britannia Refined Metals in 2000. Further increases in China and the opening of a new plant in Malaysia will be the main impetus behind a 2.6% expansion in Asia. United States output is, however, forecast to fall by 3%. Western World Refined Metal Balance 10.It is likely that the level of Chinese net exports of refined lead metal to the West in 2001 will be constrained by the availability of suitable raw materials. They are therefore forecast to be 10% lower than in 2000. Shipments from the CIS and Eastern Europe are expected to be at a similar level to 2000. 11.Overall, after having also taken into consideration releases from the United States Defence National Stockpile, the forecasts indicate that demand will exceed supply in the Western World in 2001, resulting in a market deficit of 59,000 tonnes. Zinc – Outlook for 2001 Demand 12.A small increase of 0.2% to 8.83 million tonnes is forecast for global consumption of refined zinc in 2001. In the West, an anticipated 1.4% contraction to 6.89 million tonnes will be the first decrease since 1996. 13.The economic slowdown in the United States has resulted in a significant revision to the US demand forecast which now anticipates a fall of 9.1%. In contrast, growth of 0.7% is expected in Europe with increases mainly in Finland, Germany, the Netherlands and Spain being partially balanced by falls in Belgium, France and the United Kingdom. 14.Despite an anticipated fall in Japanese demand of just over 5%, overall growth in Asia of 3.7% is expected, due mainly to rises in China, India and the Republic of Korea. Supply 15.Global zinc mine output is expected to rise by 4.2% to 9 million tonnes in 2001, and in the Western World by 3.4% to 6.44 million tonnes. This is mainly a consequence of increased output at the Lisheen mine in Ireland, additions to capacity in Mexico and Peru as a result of the opening of the Francisco I. Madero and Antamina mines respectively and a further rise in output at the many small mines spread throughout China. 16.These rises will, however, be partially balanced by reductions in Canada, Japan, Spain, Sweden and Turkey. 17.Production of refined zinc metal is predicted to increase by 4.6% to 9.34 million tonnes worldwide and by 3.6% to 6.38 million tonnes in the West. 18.An expected rise of 3.6% in Europe will be due mainly to additional output in Belgium, Finland, Italy, Norway, Spain and the United Kingdom. In Korea, the new production plan recently announced by Korea Zinc and Young Poong will result in a rise of 11.7%. Increases are also anticipated in Australia, China and Mexico. 19.Production in Canada is forecast to fall by 8%. This is principally as a consequence of Cominco’s decision to sell power, resulting in a significant reduction in refined zinc output at its Trail refinery in British Columbia. Western World Refined Metal Balance 20.Good domestic demand and price levels higher than those available internationally have restricted the level of Chinese shipments of refined zinc to the West so far this year. If this trend continues it is estimated that net exports from China for the year as a whole will be 14% below the total achieved in 2000. Shipments from the CIS and Eastern Europe are, however, likely to be at a similar level. 21.Overall, the cutbacks announced in production since the Group’s last forecasts were published in October 2000 appear to have been balanced by downward revisions to anticipated demand in a number of countries. As a result, the Group still anticipates that there will be a substantial surplus of refined zinc metal supply over demand in the Western World in 2001.