LATEST TRENDS IN NON- FERROUS METAL INDUSTRY
The basic metal index gained almost 8% since the start of 2017 that indicated confidence in the fundamental basic metal trends. Confidence in the copper market remains tepid, while the outlook for the aluminum, zinc and nickel markets is brighter. The strong upward trajectory was mainly fuelled by a vigorous recovery in metal end-using sectors and optimism about the rest of the year.
Non-ferrous markets have their own regional dynamics and much depends on the supply of scrap metal. In the US, the scrap markets are in thrall to the upcoming elections and their ensuing impact on the economy. The prevailing mood of uncertainty is putting a damper on activity. In the EU, there is a sufficient supply of non-ferrous metals. Moreover, end-user demand is relatively weak and stocks are high. The uplift in LME prices – notably for aluminum, nickel and zinc –offers some solace for the market as trends in non ferrous metals’ prices and LME prices run almost in parallel.
A slowdown in China’s economy has led to a surge in metals from aluminum to zinc flooding world markets, triggering a rise in trade tensions from the US to Asia. While on the domestic front, gradual increase in the demand for non ferrous metals in expected. The first half of FY2017 can expect a positive outlook in the market.
Mine production of zinc fell by 1.8 percent in 2016 compared to 2015 mainly due to the reduction of production in Australia, India, Ireland and Peru which was not affected by the increase in Bolivia, China and the Russian Federation. There is growing concern over current suppliers of zinc who may have an increasing problem of maintaining supply. It has been estimated that in 2017 may disappear over 1.2 million tons of annual zinc production. Global demand for zinc amounts to approximately 13 million tons per year. High consumption of zinc has been observed in the steel industry which is not directly related to non-ferrous metals market. Zinc is used as an anti- corrosion coating, especially for steel sheets.
International Lead & Zinc Study Group suggests the excess demand for zinc, which will increase by 1.98 million tons in 2017. From the beginning of 2016, the rate for zinc rose by 78 per cent in February 2017 and was the highest rate of all the listed non-ferrous metals.
The global balance for refined copper in 2016 as given by the International Copper Study Group, notifies that demand will exceed supply by about 56 thousand tons. World demand for this metal is about 23 million tons.
China generates about 40 percent of global copper demand and having that in mind the condition of the economy in this country has the largest impact on the price of this metal. In the long-term demand for copper in China should be reinforced by investments in the sector of renewable energy and the need to reduce pollution in large cities.
In the meantime, production of refined copper has kept pace with demand in the subsequent months of 2016. International Copper Study Group has estimated oversupply by 160,000 tons in 2017. Nevertheless, copper prices have risen by 28% in the first half of 2017.