Asian zinc offtake falls marginally

The consumption of zinc, the primary input for making galvanised steel and batteries, has fallen marginally in Asia including India on a year-on-year basis between January and March this year, according to a Portugal-based global industry body.

The International Lead and Zinc Study Group reported that zinc consumption in Asia amounted to 1,406,000 tonnes in Q1 CY07 compared with 1,421,000 tonnes in Q1 CY06.

This decline in Asian consumption has come at a time when zinc production in the region grew 11.9 per cent y-o-y to 1,520,000 tonnes in the last quarter.

Among the domestic players, Hindustan Zinc is one of the key suppliers. Analysts highlighted that if this trend of weak consumption in Asia continues, it could hurt the company's offtake. An emailed questionnaire sent to the company elicited no response.

It does appear that user industries for zinc in Asia are adopting a cautious attitude, given that the average London Metal Exchange price for zinc was $3,460 a tonne in the March 2007 quarter as compared to $2,248 a tonne in the March 2006 quarter, analysts said. Zinc currently trades at $3,605 a tonne on the LME.

Meanwhile, the total global consumption of zinc between January and March 2007 amounted to 2,743,000 tonnes compared with 2,694,000 tonnes a year ago, the industry body said. Hindustan Zinc's production (mined metal content) was lower by 3 per cent y-o-y at about 121,423 metric tonnes in Q4 FY07.