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China¡¯s zinc consumption to rise 4.5% in 2007
Announce time£º2007-7-9 15:47:30 from£º ---
China¡¯s zinc consumption to rise 4.5% in 2007
China¡¯s zinc consumption will rise 4.5% to 3.1 million metric tonnes this year, resulting in a supply shortage of around 370,000 metric tonnes, said Lei Wanjun, an analyst at Great Wall Securities.

"Zinc consumption will maintain its rapid growth in 2007, which may push average prices higher to around RMB 32,000 ($4,156) in 2007," said Lei. Zinc prices in the physical market stand at around RMB 31,000 ($4,025) in the current market.

"Technical upgrades and industrial consolidation in the domestic steel industry will boost zinc consumption this year," said Lei. Zinc is mainly used in the steel industry.

China¡¯s galvanized sheet output grew by 40% per year during the past three years. Current domestic capacity stands at 10 million metric tonnes and is expected to exceed 15 million metric tonnes by the end of this year.

Domestic galvanized sheet output will reach 10.5 million metric tonnes in 2006, up 45% from the previous year, and increase zinc consumption by 145,000 tonnes from last year.

Lei added that the currently low LME zinc stocks will also push prices up this year. LME stocks are at less than 10,000 metric tonnes, equivalent to four days of world consumption.

World zinc output reached 10.669 million metric tonnes in 2006. China¡¯s output was 2.75 million metric tonnes, and it been the largest zinc producing country in the world for 15 straight years.

China became a net zinc importer in 2004 and imported about 400,000 metric tonnes zinc per year in the past couple of years. China¡¯s net imports of zinc products, including mined output, or so-called concentrates, were at 860,000 tonnes last year.

Interfax recently reported that the Shanghai Futures Exchange may launch zinc futures trading soon.

Jianjun, general manager of the trading body of Zhu Zhou Smelter Company Ltd., China¡¯s biggest Zinc production company, said the contract would be launched in February or March of this year. Tong Leshen, director of the market information department at Shanghai Nonferrous Metals Association, said zinc futures would be launched sometime in the first half of the year.

However, a senior official from Shanghai Futures Exchange refused to comment on the news.

A 4.5% rise in consumption would be at the low end of estimated growth which may turn out to be 8% or more. Forecasts for demand to 2010 are suggesting up to a 50% increase and these figures have been the driver of prices, which saw new highs in November last year.

Prices have retreated 16% or so since then and continue to ease off. China is committed to exporting high end finished steel products and, until that industry reaches an apex, demand for zinc will continue to grow.

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