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

Global demand for lead and zinc is expected to decline by 6.5pc and 5.3pc, respectively, in 2020 on an annual basis before rising again next year, according to the International Lead and Zinc Study Group (ILZSG).


The group predicted on Wednesday that lead demand will fall to 11.39mn mt by the end of this year but will increase by 4.4pc from 2020 to 11.89mn mt in 2021. Similarly, the demand for zinc will drop to 12.98mn mt before rising by 4.2pc to 13.52mn mt during the same period under comparison.


Chinese demand to fall

ILZSG attributed the lower demand for lead to a 1.6pc fall in China’s appetite for the material due to a decline in automotive production. However, it expects a slight increase of 0.4pc in the Chinese market next year, amid rising e-bikes and lead-acid battery output.


In Europe and the US, lead usage is expected to fall by 9.7pc and 7.5pc, respectively, by the end of 2020, compared with last year, due to the impact of the COVID-19 pandemic on the regions’ automotive industries, and lower car sales, which reduced demand for replacement batteries. Consumption is expected to rebound in both the regions in 2021, rising by 7.9pc in Europe and by 2.6pc in the US.


For zinc, consumption in China is expected to remain at last year’s levels in 2020, as galvanized plate output was flat during January-July 2020 compared with last year. In 2021, however, zinc consumption could rise by 2pc.


After falling by 4.6pc in 2019, zinc demand in Europe will decline further by 7.7pc this year due to a decrease in the metal’s usage in Germany, Spain, France, Russia, Norway, and Poland, according to the ILZSG forecast, which expects European demand to recover by 6.5pc in 2021. Zinc demand will also fall in Australia, India, Korea, Taiwan, and the US, before recovering next year.


Lead supply to improve 

On the supply side, ILZSG expects lead mine supply to decline by 4.7pc to 4.50mn mt in 2020 from 2019 but predicts an increase of 4.8pc to 4.72mn mt in 2021 from the previous year. For refined lead, the group forecasted global supply to fall by 4.3pc to 11.66mn mt this year before rising by 3.6pc to 12.08mn mt next year on an annual basis.


Lead’s 2020 mining production was significantly impacted by the pandemic that put many mines under care and maintenance for over three months in the first half of the year. Production was especially impacted in mining-rich regions like Peru, Mexico, South Africa, and Bolivia. 


For refined lead, ILZSG noted that a significant rise in production in Australia had offset the steep declines observed in France, India, South Korea, Mexico, the US, Belgium, and China during the year. Refined lead output was also affected by the closure of Glencore’s Belledune smelter in Canada last December and Germany’s Nordenham smelter, which was idled in July.


Higher output of refined lead from India and China is expected to shore up global output in 2021.


China, India to aid zinc output rise

Zinc mine production could fall by 4.4pc to 12.33mn mt at the end of 2020 from last year, though refined zinc production will increase by 0.9pc to 13.60mn mt during the same period, before rising further by 2.9pc to 13.99mn mt next year.


In 2020, zinc mining and refined zinc production was considerably affected by pandemic-related closures of mines and smelters, especially in Latin America. The closure of Canada’s Langlois mine in December last year and the idling of the country’s Silvertip and Caribou mines in Q1 2020, also decreased global zinc output this year.


In 2020, declines in output from China, Turkey, Finland, Kazakhstan, and Sweden this year, could be offset by an increase in production in Australia, India, and South Africa. In 2021, however, all these countries are expected to up production.


The rise in refined zinc production this year will be led by a 1.6pc growth in Chinese output, along with rising production in Australia, India, Canada, France, the US, and Italy. All these countries will register higher outputs in 2021 as well.

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