Zinc prices initiated the May month with lot of pressure. However recovery in the financial markets and support from the Dollar assisted the prices at the end of the month. The prices on LME were in the region of $ 1400-1600 per tonne levels. In the domestic futures market support came from the increase in confidence on manufacturing front.
The rise in prices of Zinc has prompted many smelters across the world to restart their idled capacity. This on one hand is a good sign of revival on the other it will keep the market in surplus for a longer duration.
The rise of demand is setting the tone for the better future of the metal. In domestic futures market Zinc broke crucial resistances of Rs 70 per kg mark on 29th May 2009 and this is not the end of the road yet. Bargain hunting will further elevate the levels. Markets are expected to remain in surplus even after the production cuts but the good thing is that smelters have started witnessing the destocking of Zinc.
Zinc Has Wide Range Of Applications:
The rise in prices of Zinc has prompted many smelters across the world to restart their idled capacity. This on one hand is a good sign of revival on the other it will keep the market in surplus for a longer duration.
The rise of demand is setting the tone for the better future of the metal. In domestic futures market Zinc broke crucial resistances of Rs 70 per kg mark on 29th May 2009 and this is not the end of the road yet. Bargain hunting will further elevate the levels. Markets are expected to remain in surplus even after the production cuts but the good thing is that smelters have started witnessing the destocking of Zinc.
Zinc Has Wide Range Of Applications:
Zinc is the fourth most used metal and has applications in a wide range of industries. Zinc deposits often contain other base metals such as lead and copper or precious metals such as silver. The three leading uses of zinc are in steel galvanization, in brass production and in other alloys. Galvanization, where zinc is used to protect steel against corrosion, is a rapidly growing use of zinc and constitutes its main market. Brass is an alloy made up of zinc (10% to 40%) and copper and is widely used in the construction sector. Zinc oxide is used in the production of paint, printing ink, cosmetic products, soaps and other pharmaceutical products.
World refined Production Exceeds Usage:
A recent report from International Lead and Zinc Study group showed the trend for Zinc. According to the report during the first three months of 2009 world production of refined Zinc metal exceeded usage by 187000 tonnes. The mine production for the period of Jan-March 2009 was 2501000 tonnes as against 2697000 tonnes for the corresponding period previous year. World refined Zinc Metal production stood at 2605000 tonnes for the period of Jan-March 2009, as against 2852000 tonnes in Jan-March 2008.
World zinc mine output declined by 7.3 %. This was mainly due to reduced output in Australia, China, Ireland, Peru and the United States. Global output of refined Zinc also declined by 8.7% due to fall registered in Belgium, Canada, China, Germany, Japan, Netherlands and a number of other countries.
Indian primary Zinc production misses production targets:
Indian primary zinc production missed the actual production targets by 5% in the month of April. A rise in Binani Zinc by 438 tonnes was more than offset by the fall in Zinc major Hindustan Zinc, which registered a fall of 3004 tonnes in the month of April. On M-o-M basis Hindustan Zinc (HCL) primary Zinc production for April 2009 was 46786 tonnes as against 41718 tonnes in April 2008 down 12%. Binani Zinc registered a rise in the actual production for the period of April 2009 to 3353 tonnes from 1672 tonnes in April 2008.
China remains main growth driver for demand:
China was the main growth driver for the world demand of Zinc. Chinese demand grew by 6.4%. However fall in other major countries offset the rise in China. Japan registered a fall of 51% in demand while Europe and USA registered a fall of 24.35 and 6.5% respectively. Chinese net imports of refined zinc metal totalled 207000 tonnes for the first quarter of 2009 compared to net exports of 1000 tonnes for the same period of 2008.
LME Zinc prices were in the range of $ 1473 per tonne at the start of May, but lack of demand has pulled the prices towards $ 1451 per tonne levels on 14th May 2009. From where the prices have shown significant recovery towards $ 1525 per tonne on the last trading day of the month. In Domestic futures markets, Zinc prices were in the range of Rs 75 per kg on 1st May 2009, it then went down towards Rs 69 per kg levels on 28th May 2009 and since then there was a steep rise in prices with range of Rs 72 per kg. In the last few months a sharp depreciation was registered in the value of Dollar against the Euro, this helped the bulls take advantage and Base metals prices improved sharply.
Outlook:
Zinc prices are expected to remain firm in days to come, although slight hiccups can take the prices near to its lows but strong consumption patterns from the user industry will ensure that the demand supply gap is bridged. Initially the rally in Zinc was linked to short covering by the participants, in coming days it will be bargain hunting at lower levels. MCX Zinc futures for September expiry is expected to find supports at Rs 65 per kg levels, with targets of Rs 80 per kg in medium term.
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