Early 2010 lead, zinc supply exceeds demand: ILZSG report

Amidst a struggling auto industry and global economy, lead and zinc seem to have high supply and low demand in the first four months of 2010, according to a recent International Lead and Zinc Study Group (ILZSG) report.

The following is an edited and condensed version of the 68-page report available on the ILZSG website ( wwww.ilzsg.org).

Lead

Preliminary information shows that during the first four months of 2010, the world supply of refined lead metal exceeded demand by 46,000 tonnes with reported stocks increasing by 37,000 tonnes.

A 12.3% increase in world lead mine production over the first third of the year was mainly due to increases in China and Australia — with the latter seeing lead-miner Ivernia restart lead production at its Magellan mine in February.

Magellan, located in Western Australia, produces 2% of the world’s lead supply, according to Ivernia.

Higher production of the soft metal in Canada, China, Germany, Japan, Mexico, the United States and balance reductions in Italy, Peru and South Korea, forced a 2.3% rise of refined lead output.

Despite a fall in Chinese apparent demand, global usage of lead rose by 3.4%. The study group credits a rise in demand from India, Japan, Thailand, South Korea and the United States. As a side note, the China Lead-acid Battery Association said the lead-acid battery sector — which comprises 75% of the countries refined lead consumption — should rise 20% on the back of the country’s green energy projects.

According to the ILZSG, between January and April, China’s export of refined lead metal exceeded imports by 3,000 tonnes — a stark contrast to 2009 imports exceeding exports by 84,000 tonnes during the same period.

Zinc

Zinc paints a similar picture but at a higher volume with preliminary data showing global refined output was 180,000 tonnes higher than usage over the four-month period.

Reported inventories increased by 143,000 tonnes and global zinc mine production increased by 14.6%, owing to higher production in Australia, China, India and Mexico.

China recently announced plans to remove export-tax rebates on some copper, zinc, lead and tin products in mid-July, which will slow the export of the zinc, according to agency.

World refined zinc metal output increased 19.2% for the months as Belgium, Canada, China, India, the Netherlands and the United States began to pump out a higher volume of the base metal.

The upswing of the economy seems to have triggered an increase in global demand, according to the report. Zinc saw a 23.3% rise in demand due to recoveries in Europe, Japan, South Korea, Southeast Asia and the United States. China also saw some growth, triggering the rise in global demand.

January to April saw a drastic fall in net imports in China, with import of zinc reaching 68,000 tonnes — nearly a fifth of the 313,000 tonnes imported during the same period in 2009.