Monday, June 27, 2005 STRONG zinc demand out of China and a lack of supply growth is positively offsetting a sick market for the metal in the USA and Europe.
Macquarie Research is flagging a zinc market in deficit to the tune of just over 200,000 tonnes in 2005, and significantly, another likely deficit in 2006 based on "modest demand growth assumptions", and resulting in, "inventories down to critical levels".
Demand from China and other Asian countries such as India and South Korea have lead Macquarie to tip 2% global zinc demand growth in 2005.
However there is the potential for more.
"If anything, our assumption of 15% growth in China may prove to be conservative – if Chinese demand were to grow by 20%, this would be enough to raise global demand growth to over 3%," the bank said.
"Such growth rates are incredible given the severity of the downturn in the US and Europe."
Macquarie put Chinese apparent demand for zinc in the first four months as being up 12.9% year-on-year, which, while strong, was a long way short of the 50% year-on-year growth of Chinese coated steel production – hence Macquarie's "conservative" comment regarding 15% zinc demand growth in 2005.
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