Lisbon, Portugal — At the 61. Session in Lisbon, Portugal End of October 2016, the International Lead and Zinc Study Group included a meeting of the Study Group’s Statistical and Forecasting Committee to review the current levels of world supply and demand for lead and zinc and the outlook for 2017. The Group anticipates that in 2016 supply will exceed demand in the global refined lead metal market by 42,000 tonnes. In 2017, an even closer balance is predicted with current data indicating that the market will be in surplus by 23,000 tonnes. The global zinc usage in 2016 will exceed production by 349,000 tonnes resulting in a further draw down of both reported and unreported stocks. In 2017, the world refined zinc metal market is expected to remain in deficit with the extent of the shortage forecast at 248,000 tonnes.
Relating to lead usage, global demand for refined lead metal is forecast to rise by 2.8 percent to 11.19 million tonnes in 2016 and a further 1.3 percent to 11.34 million tonnes in 2017. In China, strong growth in vehicle production and sales have helped to balance declining demand for lead-acid batteries in the e-bike sector where sales of lithium-ion batteries are reported to be rising. It is anticipated that Chinese lead usage will rise by 2.5 percent in 2016 and 1.1 percent in 2017. After declining in 2015, European usage of lead metal is forecast to increase by 5.3 percent this year assisted by a positive performance by the automotive sector. However, demand in 2017 is predicted to remain flat. In the United States, the latest figures from the Battery Council International (BCI) show a small increase in shipments of both original equipment and replacement automotive batteries this year. This is expected to influence a rise in lead usage of 1.9 percent with a further increase of the same magnitude forecast in 2017.
At 4.75 million tonnes, global lead mine supply in 2016 is forecast to be 0.3 percent lower than in 2015 with an increase in China largely balancing reduced ex-China production in particular in Australia, India, Mexico and the United States. In 2017, global output is expected to rise by 3.3 percent to 4.91 million tonnes. Chinese imports of lead contained in lead concentrates this year are expected to be significantly lower than the record high achieved in 2015 but are still forecast to exceed 750,000 tonnes.
An anticipated 3.6 percent increase to 11.23 million tonnes in refined lead metal production this year will mainly be a consequence of higher output in China and the Republic of Korea where Korea Zinc successfully commissioned a new 130,000 tonne per year capacity primary lead plant in November 2015. The Republic of Korea is currently the world’s third largest producer of refined lead metal behind China and the United States. In 2017, global output of refined lead metal is forecast to increase by 1.2 percent to 11.36 million tonnes. This will be primarily due to rises in Belgium, China, Mexico and the United States where Aqua Metals are due to soon commission their new secondary electrochemical refining plant in Nevada.
Relating to zinc usage, it is anticipated that global demand for refined zinc metal will rise by a marginal 0.6 percent to 13.57 million tonnes in 2016 followed by a 2.1 percent increase to 13.85 million tonnes in 2017. In China increased demand from the automotive sector is expected to be partially balanced by a decline in exports of galvanized sheet steel and demand is forecast to increase by 1.8 percent in 2016. A further rise of 1.3 percent is predicted in 2017. Usage in Europe has been flat over the past four years and this trend is predicted to continue in 2016 and 2017 with limited growth of 0.7 percent and 0.5 percent respectively. In the United States, an anticipated fall in apparent consumption of 8.7 percent this year will be influenced by drawdowns in unreported inventories. However, in 2017 demand is forecast to rebound by 11.8 percent.
The ILZSG anticipates that world zinc mine production will fall by 5.6 percent to 12.47 million tonnes in 2016 and then recover by 5.9 percent to 13.20 million tonnes in 2017. On an ex- China basis output this year is expected to fall by 11.7 percent, equivalent to almost a million tonnes of contained zinc, before partially recovering in 2017. The most significant reductions in 2016 will be in Australia, India, Ireland and Peru. Australian output has been negatively affected by the closure of MMG’s Century mine at the end 2015 as well as cutbacks at Glencore’s operations. A sharp fall in India is a consequence of reduced output at Hindustan’s Zinc’s Rampura Agucha mine. In Ireland, the decrease is due to the closure of the Lisheen mine in 2015, and in Peru is mainly a consequence of reduced production at the Antamina and Iscaycruz mines. In 2017, output is forecast to rebound in Australia, India and Peru and to increase in China, Kazakhstan, Mexico and the Russian Federation. It will also benefit from the recent start of zinc production at Nevsun Resources’ Bisha mine in Eritrea. And it is expected that the volume of zinc contained in zinc concentrates imported by China in 2016 will be significantly less than the 1.37 million tonnes shipped to the country in 2015.
Global refined zinc metal output is predicted to fall by 3.2 percent to 13.22 million tonnes in 2016 mainly due to reductions in Argentina, Australia, Belgium, India, Mexico and the United States. In 2017, production is expected to recover in Australia, India and Mexico and overall global output is forecast to rise by 2.9 percent to 13.60 million tonnes.
Source: International Lead and Zinc Study Group