World Zinc Production and Consumption - DIIS
Australia’s Department of Industry, Innovation and Science’s Resources and Energy Quarterly December 2019 said “Refined zinc consumption estimated to decline weakly in 2019. Demand for refined zinc has been adversely affected by trade tensions 3nd slow industrial production in 2019. Zinc's main use is in protecting steel and other metals used in the construction, transport and manufacturing industries, so decade-low global growth and weaker manufacturing activity have taken their toll on metal usage. While Chinese demand for refined zinc has picked up after declining in 2018, and the United States looks set to report more than 5.0 per cent growth for 2019, this has been offset by diminished demand in Japan, Europe and India. As a result refined zinc demand is expected to fall by 0.3 per cent in 2019 to 13.6 million tonnes.
The demand outlook for 2020 and 2021 is one of subdued growth. World steel production is forecast to grow slowly over the outlook period, increasing by around 1 per cent between 2019 and 2021. Refined zinc consumption should follow suit
Refined zinc consumption estimated to decline weakly in 2019 anticipated to increase by 286.000 tonnes from 2019 to 2021 or an average of .9 per cent a year. China, India and other Asian economies are expected to drive this growth; elsewhere metal usage is likely to decline.
Emerging markets to play starring role in rising zinc consumption. Developing Asian economies are forecast to play the main role in fuelling zinc consumption over the outlook period. China's economy is expected to grow at 5.5 to 6.0 per cent over the outlook period, almost double the global average, and this should spur zinc usage. Other Asian economies, including India, Vietnam and Thailand, are also expected to consume considerable quantities of zinc over the outlook period, as rising urbanization and industrialization lead to greater use of galvanised steel. Refined zinc consumption growth is forecast to average 2.5 per cent in China, India, and developing Asia from 2019 to 2021.
India has high potential for zinc usage, and is forecast to show the greatest growth in demand over the outlook period. India's per capita consumption of zinc is only 30 per cent of the world average of 2.0 kg per person, and the government has indicated interest in promoting greater use of the anti-corrosive and therefore more sustainable metal.
Indian resources company Vedanta Limited has also indicated intentions to become the world's top zinc producer by 2022 through its subsidiaries Hindustan Zinc 3nd Zinc International. Moreover, the country has ambitious steel-production targets, aiming to more than double annual steel consumption to 255 million tonnes by 2030. While the country will need to overcome a number of challenges to achieve this, it has already become a pivotal player in global steel production, and is forecast to grow production by an average of 6.3 per cent from 2019 to 2021.
In the rest of the world, refined zinc usage has fallen in 2019. In Germany, usage is estimated to have declined by 11 per cent from 2018 driven in part by a deceleration in automotive production. Usage in the United Kingdom is forecast to fall by 10 per cent, after the second biggest steel producer. British Steel, entered insolvency in May. In Japan, usage is forecast to fall by 2 per cent from 2019 as a result of a weakening manufacturing sector.
While European monetary policy may help to boost economic growth in the Eurozone, the outlook for refined zinc usage outside of developing Asi3 is fairly sombre. Consumption of the metal is therefore forecast to decline by an average of 1.0 per cent to 2021
China likely to continue to use large amounts of zinc, but risks have risen China accounts for around half of global zinc and steel consumption, and its appetite for zinc remains large. In the September 2019 Resources and Energy Quarterly, refined output growth was forecast to grow only marginally, as a result of poor first half results. While zinc consumption has picked up on the back of an unexpected jump in manufacturing activity in the August to October period, Chinese metal usage is still only estimated to have grown by 0.1 per cent in 2019. Trade tensions, which have impacted manufacturing activity and business confidence as well as a slowing economy, appear to be the main causes.
Chinese refined zinc usage is forecast to pick up in 2020 growing to 0.8 million tonnes. Chinese output is expected to grow again in 2021. However, there is a degree of uncertainty surrounding the pace of China's economic growth. While the government is implementing economic stimulus measures, in an attempt to offset the impacts of trade frictions, these efforts are likely to be more restrained than previously.
China also has to contend with economic challenges of a deeper, structural nature, such as mounting consumer debt, an ageing population, and low productivity, which complicate future growth prospects. Notwithstanding this, China's rate of GDP growth remains robust and will likely continue to be one of the highest in the world, averaging between 5.5 and 6.0 per cent over the forecast period. This growth should sustain zinc demand growth, though perhaps not at previous rates.