another article to contradict the ones we have seen saying that their will be a surplus.
China 2007 zinc consumption seen at 30 pct of world total, up 6.9 pct - Numis 01/30/07 01:22 am (GMT) BEIJING (XFN-ASIA) - World zinc consumption is forecast at 11.35 mln tons in 2007, up 2.6 pct, with China seen accounting for 30 pct, up 6.9 pct in volume terms, Numis Securities said.
"China has been helping to drive up zinc prices with its high consumption levels as the economy continues to develop. It is by far the largest consumer with the US a distant second place with only a 10 pct market share," Numis said in a research note.
Zinc, which has been hovering around 3,700 usd per ton recently on the London Metals Exchange (LME), sees 47 pct of its stocks in China go to the production of rust-proof galvanized steel used in industrial, commercial and residential construction.
"Demand is highly dependent on the automotive and construction industries, and has been benefiting from the Chinese growth story," Numis said.
Prices may go even higher this year thanks to strong demand and the potential for more market speculation.
"In light of the high prices seen in recent months and growing demand, China is set to launch zinc futures trading in Shanghai to help consumers and producers hedge against risk. However, this does expose the metal to further speculation," the note added.
Zinc prices are currently well below the 4,600 usd per ton high of December, having fallen in response to US manufacturing data, which triggered a correction in other metals including copper.
"However, the zinc supply demand balance is likely to finish this year in deficit, unlike copper which we see in surplus," Numis said.
Fears over security of supply are likely to prevent significant downward price moves for the time being, and there is considerable scope for a recovery. Market analysts have talked about a recovery in zinc prices to back over the 4,000 usd per ton level, the note added.
(20min delay)