Global zinc demand could rise dramatically over next three years—bodes well for Zinc miners

Analyst Helen O'Cleary says, at recent conference, that the price of zinc could get up to $4,500/mt by the end of the decade. — Photo courtesy World News.

The global zinc market has potential to add a further 1.9 million mt of demand from new initiatives over the next three years, according to Stephen Wilkinson, director of the International Zinc Association (IZA).

Speaking at the Metal Events 6th International Zinc conference in Dubai, Wilkinson said that zinc is essential for human health and that one of the key areas of demand will come from the addition of zinc to fertilizers.

He laid out data that showed vastly improved crop yields when zinc is added to the fertilizer blend.

The main areas of potential demand growth were noted as China, India and Brazil -- with all three countries having the opportunity for 300,000 mt of growth in zinc demand over the next three years.

During the conference there has been a lot of buzz around a potential supply deficit from 2016 onward. When quizzed by a member of the audience on where the additional supply would come from, Wilkinson said that as with every cycle a deficit would lead to a higher price which in turn would stoke mine investment and fresh supply.

He pointed out, as many presentations have during the conference, that steel galvanizing was a key market for zinc. IZA data outlined that the business takes up 56% of zinc demand globally.

"Zinc is becoming more and more married to steel," he said.

Regarding the potential for a deficit some participants were dubious of some of the figures.

"We keep hearing that a deficit is on the horizon, but when?" one trader asked. Another shrugged off the idea completely, pointing that recycling of zinc could fill any possible gap in supply.

Salam Al Sharif, ambassador for the Middle East Bureau of International Recycling and President of the Bureau Of Middle East Recycling, said in his presentation that recycling was key to the zinc industry.

He pointed out that the metal is 100% recyclable.

During the conference's sessions CRU analyst Helen O'Cleary said that price of zinc could get up to $4,500/mt by the end of the decade as supply was outstripped by increasing demand.

O'Cleary said that in the space of five years demand would run ahead of supply pushing the metal closer to "pinch point."

She sees the global zinc market being roughly in balance in 2014 with a modest deficit in 2015. However, in the absence of fresh mine supply "enormous deficits are likely" further out.

Source: Platts Media