Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

HZL recently concluded its Q1 results and has maintained its production and cost guidance for FY22. The company shared its outlook for the metals in the conference call held on Friday, July 23, while reporting financial results. HZL operational results were out in mid-July. 


Global zinc market update

Zinc prices reached 3-year-high in June but slipped since then around growing concerns around inflation, strengthening dollar and China’s release of reserve zinc in batches. 


The International Lead and Zinc Study Group (ILZSG) pegs global demand for refined metals to increase by 4.3pc to 13.78mn mt in 2021 against a drop of 3.9pc in the prior year. 


China’s southwestern Yunnan province was affected by power shortages, which could impact zinc smelting capacities to the tune of 1.2mn mt and impact the production of 20,000mt of refined zinc. 


Mine production in Peru has started showing signs of recovery. Mongolia has decided to cut power consumption which can result in a shortage of global supply. 


Zinc inventories at the LME exchange are enough only to meet global demand for eight days, which is the lowest in this calendar year. Lower stocks and robust demand is expected to put upwards pressure on spot metal premiums, globally. 


Domestic zinc market update

The Indian economy was in a bad shape in May due to the second COVID-19 wave but is improving since the unlocking process began in June. The second wave was softer than the first, and demand is expected to only improve from here on. 


Zinc demand was high with galvanizing driven by construction, infrastructure, and automobiles demand. India’s push towards infrastructure development should only be an impetus towards the better consumption of zinc locally. For the medium-term HZL expects demand to rise from the transport and highways sector which use galvanized steel bridges. 


Lead market

Lead prices increased over the quarter in Q1 FY2022 (April-June) owing to supply constraints. India’s demand was hurt due to the second wave, like zinc, demand for lead from the auto sector was hit. With the start of Q2, lead demand has started to improve from replacement auto battery markets, believes HZL, as distribution networks have opened up. 

Leave a Reply

Your email address will not be published.