Asia zinc offtake strong despite high prices

The consumption of zinc in the Asian region has remained strong during January to May 2007, according to the Portugal-based global industry body, International Lead and Zinc Study Group.

The growth in consumption has come at a time when zinc prices are considerably higher on a y-o-y basis.

Hindustan Zinc is one of the key suppliers among domestic players and it is expected to exploit this growth in consumption in India and neighbouring countries.

According to the global industry body, consumption of this non-ferrous metal in Asia (including India) was 24.74 lakh tonnes between January to May 2007, as compared to 23.55 lakh tonnes in the corresponding period of the previous year.

Zinc is a key input for the galvanised steel industry and it is also used in the manufacture of batteries.

The demand for zinc has been strong despite the average price being as high as $3552.3 a tonne on the LME between January and May 2007, about 34 per cent higher than $2651.1 a tonne in the corresponding period of the previous year.

Meanwhile, Hindustan Zinc's production (mined metal content) was up 2 per cent y-o-y to 1.34 lakh tonnes in April-June 2007, while its refined zinc output was higher by 13 per cent in the same period.

However, the company's operating profit margin fell 430 basis points y-o-y to 72.9 per cent in the quarter April-June 2007, due to the rising cost structure.

Hindustan Zinc's 1,70,000-tonne smelter project is expected to be completed by December 2007.