By Millicent Dent
New York 31/10/2016 - Refined lead will remain in a surplus in 2017 while the refined zinc market will continue to tighten into next year, according to the International Lead and Zinc Study Group (ILZSG).
Global usage of refined zinc should outpace production by 340,000 tonnes in 2016, causing a further drawdown of both reported and unreported stocks. In 2017, the market is set to remain in a deficit, with an anticipated shortage of 248,000 tonnes of material, the Lisbon-based trade group said in an October 31 report.
In 2016, global demand for refined zinc will edge 0.6% higher to 13.57 million tonnes, followed by a 2.1% jump to 13.85 million tonnes in 2017. At the same time, global refined zinc output is projected to decline by 3.2% to 13.22 million tonnes in 2016, though a recovery is expected in 2017 - output is seen rising 2.9% to 13.6 million tonnes.
The automotive sector in China is the leading factor behind the increase in demand for zinc over the next couple of years, as well as a marginal uptick in usage in Europe and a surge in demand in the US in 2017.
The fall in output this year is primarily attributed to reductions in Australia, Belgium, India, Mexico and the US. But production recoveries in Australia, India and Mexico in 2017 are expected to help boost global output.
Supply of refined lead will exceed demand in the global market by 42,000 tonnes in 2016, with the surplus shrinking by 45.2% to 23,000 tonnes the following year, according to the ILZSG’s October 2016 forecasts.
Global demand for lead is projected to grow by 2.8% to 11.19 million tonnes in 2016 and a further 1.3% to 11.34 million tonnes next year.
Meanwhile, global production is seen jumping 3.6% to 11.23 million tonnes in 2016 and increase 1.2% to 11.36 million tonnes the following year.
The ILZSG attributes the uptick in demand to strong growth in vehicle production and sales in China, the positive performance of the automotive sector in Europe and increased usage of original equipment and replacement automotive batteries in the US.
Higher production in 2016 is primarily because of increased output in China and South Korea, while the rise in output in 2017 will be mainly due an uptick in production in Belgium, China, Mexico and the US.
(Editing by Tom Jennemann)