Zinc
is utilized as a protective coating for other metals, such
as iron and steel, in a process known as galvanizing. Zinc
finds use as an alloy with copper to make brass and also as
an alloy with aluminum and magnesium. There are, however,
a number of substitutes for zinc in chemicals,
electronics, and pigments. For example, with aluminum, steel
and plastics can substitute for galvanized sheets. Aluminum
alloys can also replace brass.
Zinc futures and options are
traded on the London Metals Exchange (LME). The LME zinc futures
contract calls for the delivery of 25 metric tons of at least
99.995% purity zinc ingots (slabs and plates). The contract
trades in terms of US dollars per metric ton. Zinc first started
trading on the LME in 1915.
Prices – Zinc prices in 2003 rose to
an average 40.36 cents per pound from the 23-year low of 39.64
cents in 2002. Zinc prices were depressed in 2002 due to the
weak economy and were able to rally along with the other metals
in 2003 due to the weak dollar and stronger economy. Still,
the 40.36-cent-price of zinc in 2003 was well below the 51-56
cent area seen in 1998-2000 before the US economic slowdown
began in 2000.
Supply – World smelter production of
zinc in 2002 fell –4.7% to a 3-year low of 8.910 million
metric tons from 9.350 million metric tons in 2001. The world’s
largest producer of zinc is Canada with 8.9%
of world smelter production in 2002, followed by Japan with
7.5%, and Australia with 6.4%. US smelter production accounted
for only 3.3% of world production in 2002. Australia’s
production has been rising rapidly in recent years and in
2002, production of 271,500 metric tons was up 75% from just
four years earlier. Mexico’s production has also been
rising rapidly and 2002 production of 320,000 metric tons
was up nearly 50% from three years earlier.
US mine production of recoverable zinc was
on track to fall to 745,100 metric tons in 2003, down from
754,600 in 2002, but above the 10-year US production average
of 698,000. US production of slab zinc on a primary basis
fell to 182,000 metric tons in 2002 from 203,000 in 2001,
while secondary production rose to 113,000 metric tons in
2002 from 108,000 in 2001.
Demand – US consumption of slab zinc
in 2002 rose slightly to 1.180 million metric tons from the
9-year low of 1.1140 million posted in 2001. US consumption
of all classes of zinc in 2003 rose to 1.43 million metric
tons from the 9-year low of 1.410 million metric tons in 2001.
Consumption of slab zinc by fabricators in the US was on track
to rise to 420,300 metric tons in 2003, up 16.7% from 403,600
metric tons in 2002. The 2002 production level was a record
low going back to the beginning of the data series in 1979.
The breakdown of consumption by industries
for 2002 showed that galvanizers accounted for 53% of slab
zinc consumption, 21% by the zinc-base industry, 18% for brass
products, and the rest for other miscellaneous industries.
The consumption breakdown by grades showed that 59% was special
high grade, 23% prime western, 12% high grade, and 6% re-melt
and other. Within that grade breakdown, high grade has been
rising while prime Western consumption has fallen by nearly
half in the past 3 years.
Trade – The US relies on imports for
60% of its consumption of zinc, up sharply
from the 35% average seen in the 1990s. US imports for consumption
of slab zinc rose to 874,000 metric tons in 2002 from 813,000
metric tons in 2001, while imports of zinc ore rose to 122,000
metric tons from 84,000 metric tons in 2001. The dollar value
of US zinc imports in 2002 fell to an 8-year low of million
from million in 2001.
The breakdown of imports in 2002 versus 2001
shows gains in the imports of (1) ore, (2) blocks, pigs and
slabs, (3) dross, ashes and fume, and (4) dust, powder and
flakes. Declines were seen in the imports of (1) sheets, plates,
and other, and (2) waste/scrap. Regarding zinc exports, US
exports of zinc ore and concentrates rose to 822,000 metric
tons in 2002 from 696,000 metric tons in 2001. US waste/scrap
exports in 2002 rose to 47,700 from 44,000 metric tons, and
zinc dust (blue powder) exports rose to 5,600 from 4,690 metric
tons. |
