The International Lead and Zinc Study Group (ILZSG) held its 60th session in Lisbon, Portugal, during October, which included a meeting of the group’s statistical and forecasting committee to review the current levels of world supply and demand for lead and zinc and the outlook for 2016. The ILZSG forecasts were prepared before Glencore’s announcement to cut zinc production by 500,000 metric tons (mt) and contained lead mine production by 100,000 mt (See Leading Developments, p. 5).
Global demand for refined lead metal is forecast to fall by 0.7% to 10.82 million mt in 2015. In 2016, an increase of 2.6% to 11.11 million mt is anticipated. The increase in demand is attributed to the automotive and industrial battery sectors. In 2015, demand is also expected to fall in both Europe, by 0.8%, and the United States, by 3.6%. However, in 2016, European and U.S. growth of 3.1% and 1.9%, respectively, is anticipated.
After declining in 2014, world lead mine production is forecast to fall by a further 2.5% to 4.8 million mt in 2015 and then increase by 1.2% to 4.86 million mt in 2016. The main reason for the decrease this year is a 13% fall in Australian output primarily due to the suspension of production at Ivernia’s Paroo Station operation in March and a reduction in output at South32’s Cannington operation. In 2016, falls in Australia and Ireland mainly due to the closure of the Century and Lisheen mines, respectively, will be more than offset by forecast increases in China, Mexico and the Russian Federation.
An expected 1% decrease in world refined lead metal output in 2015 to 10.83 million mt will be mainly a consequence of lower output in China and Peru, where production at the La Oroya plant was suspended in June last year. In 2016, production is forecast to increase by 3.5% to 11.2 million mt, with rises in Belgium, China, India, Italy and the Republic of Korea where Korea Zinc will soon complete work on the construction of a new 130,000-mt-per-year-capacity lead plant in Ulsan.
The ILZSG continues to anticipate that there will be a close balance between global refined lead metal supply and demand in 2015. However, in 2016, increases in ex-China refined metal supply are expected to result in a surplus of 97,000 mt.
ZINC OUTLOOK FOR 2015 AND 2016
It is anticipated that global demand for refined zinc metal will increase by 1.1% to 13.9 million mt in 2015 and by 3.3% to 14.37 million mt in 2016. This growth will be primarily driven by rises in China where usage is forecast to increase by 1.4% in 2015 and 4.9% in 2016, mainly as a consequence of further rises in galvanized steel sheet output.
Rising U.S. demand for zinc from the automotive and construction sectors is expected to result in an increase in usage of 1.9% this year and 1.7% in 2016. It is anticipated that European growth will be slower at 1.4% and 0.7% in 2015 and 2016, respectively.
It is anticipated that global zinc mine production will rise by a marginal 0.3% to 13.55 million mt this year. In 2016, a 1.8% rise to 13.8 million mt will be driven by forecast higher output in China with ex-China production expected to decline by 1.8%.
The completion of work last year to expand underground output at Hindustan Zinc’s Rampura Agucha mine will result in a significant recovery in Indian output in 2015.
The principal reasons for the reduction in ex-China output in 2016 are the closure of MMG’s 500,000-mt/y-capacity Century mine in Australia in August and the scheduled shutdown of Vedanta’s 175,000-mt/y-capacity Lisheen mine in Ireland in November.
An increase in global refined zinc metal production of 3.7% to 13.99 million mt this year will be primarily influenced by increased output in Canada, China, India and the Republic of Korea. In 2016, an anticipated further rise in the Republic of Korea together with increases in Mexico and Namibia will be partially offset by reductions in the Netherlands, Thailand and Japan, with overall production rising by 1.6% to 14.21 million mt. The ILZSG expects global refined zinc metal supply to exceed demand by 88,000 mt in 2015. In 2016, a fall in ex-China mine supply is expected to restrict growth in metal output and a global market deficit of 152,000 mt is forecast.
For more information, visit the ILZSG website: www.ilzsg.org.
