London 28/04/2016 - Supply in the lead market will outstrip demand in 2016, resulting in a surplus of 76,000 tonnes, the International Lead and Zinc Study Group (ILZSG) said.
Meanwhile, global demand for zinc will exceed supply by 352,000 tonnes in 2016, it added.
ILZSG expects global demand for refined lead metal to rise by two percent to 10.83 million tonnes in 2016.
In China, increased usage in the automotive and telecommunications sectors will be partially balanced by a reduction in demand in the e-bike market resulting from slower sales growth and increased competition from lithium-ion batteries, it said.
The ILZSG sees European demand growing 3.5 percent mainly due to anticipated rises in the Czech Republic, Italy, Spain and the UK
After falling 5.2 percent in 2015, it predicts a one-percent recovery in the US. Growth is also forecast in India, Indonesia, Japan, Thailand and Turkey, the group said.
Global lead mine output will increase 0.5 percent to 4.58 million tonnes mainly as a consequence of a 9.7-percent rise in China, it said.
An expected fall of 6.1 percent in ex-China production will be primarily due to reductions in Australia resulting from the closure of MMG's Century mine in August last year and cuts announced by Glencore, CBH Resources and Perilya.
After reaching a record 1.03 million tonnes in 2015, Chinese imports of lead contained in lead concentrates are set to fall to just below 900,000 tonnes in 2016.
An expected 2.3-percent rise in global refined lead metal production to 10.9 million tonnes will be principally influenced by increased output in China and the Republic of Korea where Korea Zinc recently commissioned a new 130,000-tonne-per-year lead plant in Ulsan, the ILZSG said.
Meanwhile, world usage of refined zinc metal will rise 3.5 percent to 14.33 million tonnes in 2016, it forecast.
This rise will be primarily driven by a further 4.5-percent increase in China where demand is expected to benefit from continued infrastructure investment, according to ILZSG.
After rising 3.2 percent in 2015, usage in Europe will remain stable in 2016, it predicted.
Strong growth of 13.1 percent is seen in the Republic of Korea. Increases are also forecast in India (4.1 percent), Japan (4.2 percent) and the US (3.1 percent).
A sharp fall in ex-China zinc mine production of 9.4 percent will reflect a combination of mine closures and recently announced production cuts.
Chinese output, which is reliant on production from a large number of small mines, is will grow 12.4 percent, it predicted.
Overall global zinc mine output should fall 1.4 percent to 13.27 million tonnes, ILZSG said.
A significant 46-percent reduction in Australian production will stem from the closure of MMG’s 500,000-tonne-per-year Century mine in August last year, cuts at Glencore's operations at Mount Isa and McArthur River and recently announced reductions at CBH Resource's Endeavour mine and Perilya's Broken Hill operation, it said.
Production is also set to fall in Ireland where the Lisheen mine closed in November, as well as in India, Kazakhstan, the Democratic Republic of Korea, Saudi Arabia and the US, mainly due to the suspension of operations at Nyrstar’s mid-Tennessee mines.
Chinese imports of zinc contained in zinc concentrates should be significantly lower than the 1.37 million tonnes recorded in 2015.
The ILZSG sees global refined zinc metal production rising 0.5 percent to 13.98 million tonnes in 2016 - a forecast four-percent increase in China should be largely balanced by an ex-China reduction of 2.3 percent.
In the US, a drop in output of 24 percent will be mainly due to continued problems at Horsehead Holdings' new solvent extraction plant in Moorseboro, North Carolina.
Despite the fact that lower output is also expected in countries including Canada, India and Kazakhstan, current forecasts indicate that these reductions will be more than balanced by anticipated rises primarily in China, the Republic of Korea, Namibia and Norway.
But taking into account the predicted decrease in zinc mine supply, zinc metal production expectations in some countries may be subject to downward revisions later in the year, the ILZSG added.
(Editing by Mark Shaw)