Zinc deficit may touch 4.6 lakh tn by year-end

The current buoyancy in zinc prices could be explained by the widening gap between global supply and demand of refined zinc.

According to analysts at domestic brokerage houses, the global deficit of refined zinc supplies is expected to reach 460,000 tonne by the end of CY06 as compared with 339,000 tonne at the end of CY05, largely owing to strong Chinese imports of the non-ferrous metal.

Zinc prices on the LME are currently at $4,550 a tonne levels as compared with $3,379 a tonne levels two months earlier. Meanwhile, domestic players, such as Hindustan Zinc, have been one of the key beneficiaries of strong zinc prices.

The growth in Chinese demand for zinc can be explained by the ramp-up in its galvanised steel production. In the galvanised steel industry, zinc is the one of the key inputs.

The Chinese galvanised steel industry, whose capacity was approximately 2-2.5 million tonne in CY02, has grown to about 9 million tonne currently, say analysts.

Also, demand for zinc has been boosted by strong growth from user industries, such as the Indian battery industry.

Hindustan Zinc's production of refined zinc rose 20 per cent y-o-y to 78,500 tonne in the September 2006 quarter, helped by enhanced output from the new 170,000 tonne smelter in Chanderiya, Rajasthan.