Zinc market is likely to be undersupplied by 297 thousand tonnes this year
by David Fleschen
According to the International Lead and Zinc Study Group (ILZSG), the zinc market is likely to be undersupplied by 297 thousand tonnes this year. This confirms the deficit forecast from spring. This is remarkable. After eight months, the market was still almost balanced according to the latest ILZSG data. Thus, the ILZSG does assume that demand will fall by around 2% this year. However, this is offset by a drop in production of almost 3%, with much of the decline falling in Europe, where production has to be cut back due to high energy costs.
Next year, the supply deficit should narrow to 150 thousand tonnes as production recovers. ILZSG also expects a supply deficit on the lead market this year and next year, although here too the deficit will only be about half as high at 42 thousand tonnes next year due to a recovery in production. Prices on the zinc and lead market are likely to remain under pressure in the short term despite the tight supply situation, as demand concerns dominate with a view to China (see above) and in the wake of rising interest rates worldwide.
Source: Commerzbank Research, Photo: Fotolia