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Present Scenario of Zinc Industry Worldwide for H1 2005

World Market
The world demand for zinc increased in the first half of 2005 by more than 4%, driven by strong growth in Eastern Europe and China where galvanizing capacity has grown markedly in the past year. Western zinc demand grew at a more moderate pace of 1.6 % during the same period. Cuts in coated steel production in Western Europe are temporarily affecting zinc demand in Europe although the market remains tight due to further reduction in local refined zinc capacity. Higher levels of zinc consumption in China resulted in it becoming a net importer of zinc metal in early 2004 and this has continued into this year as well.

Mine production worldwide remained at similar levels to the first half last year with increased productions in India’s Rampura Agucha Zinc Lead Mine, Morocco, Peru’s Antamina mines, and Ireland. However, this was offset by lower productions in Tunisia, Japan and Canada. As a result, the supply of zinc concentrates remained stressed, contributing to a further reduction in negotiated base treatment charges (TCs), which fell from an average of $ 141 per tonne for the full year in 2004 to $ 126 per tonne for the H1 2005. As the zinc metal outputs are largely restricted by the availability of zinc concentrates in the market, world zinc metal production grew moderately by 1% only.

The net effect of higher world zinc demand and a moderate increase in productions has led to deficit zinc market, a factor that has boosted the sentiments in zinc prices. Due to improved market prospects.

Indian Market
The Indian economy is currently demonstrating a GDP growth of ~8% per annum. Industrial production and manufacturing sectors grew at ~9% and ~ 10% per annum respectively in the first half of financial 2006, according to estimates by the Centre for Monitoring Indian Economy (CMIE); and is expected to grow at this pace for the remainder of the year. Increased activity in the manufacturing sector, continuing liberalisation and a high rate of infrastructure growth in areas such as construction and power have lead to an increased demand for metals.

Demand for zinc in India continues to grow at around 12% per annum, fuelled by demand for galvanized steel used in the infrastructure, power and automotive sectors. The mine expansion at Rampura Agucha and 170,000 TPA zinc smelter at Chanderiya was completed in May 2005. The outlook for zinc continues to be strong in both domestic and export markets. To cater to this increased demand, HZL is further developing a 170,000 TPA zinc smelter plant.

About the author:
P.R.Chandna has a B.E. in Metallurgical Engineering as well as a PGDM, having held various technical and managerial/ commercial and project execution positions in the non-ferrous metallurgical/ base metals industry. He has an in-depth appreciation of the national and international business environment in these industries, having more than three decades of experience in these industries and working on a variety of projects both in India and overseas. He has also represented the governing bodies (GB) of Consultancy Development Centre, India and Consulting Engineers Association of India, served as honorary treasurer/ secretary of Indian Institute of Metals (IIM) and organized a number of International Seminars, Conferences and Exhibitions on Metallurgy, Metals & Minerals. His website can be found at http://prchandna.tripod.com/prc.htm

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