Perspectives sur le Plomb et le Zinc Previsions a Court Term et Developpements Futurs Don Smale, Secretary-General, ILZSG Journees Nationales du FDIM 23-25 November 2005, Marrakech
ILZSG Overview Established by UN in 1959 28 member countries Promotion of market transparency Provision of forum for industry and governments In-depth research into issues of interest/concern
ILZSG 50 th SESSION London, 26 to 28 October 2005 Around 200 government and industry representatives attended Moroccan industry well represented Please contact ILZSG Secretariat at root@ilzsg.org for information
Lead Stocks and Prices '000 tonnes 400 350 300 250 200 150 100 50 September 2005 US$ per tonne 1000 900 800 700 600 500 400 300 200 100 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 0 LME Stocks LME Cash Settlement Price 4
World Lead Metal Usage Annual Change: 2005 +3.9% 2006 Distribution Germany 5% USA 20% 2006 +3.0% Others 51% China 24% 5
World Lead Metal Usage Further growth in China of 20% in 2005 and 9% in 2006 Continued decline in Europe Partial rebound in US 6
World Lead Mine Output Annual Change: 2005 +8.1% Others 25% 2006 Distribution Peru 9% USA 12% 2006 +3.4% Australia 23% China 31% 7
World Lead Mine Output 22% rise in Australia in 2005 Increases in China and India Reopening of Kassandra and Trepca operations in Europe 8
World Lead Metal Output 7.6% rise in Europe in 2005 Increases in China, India, Korea and Malaysia Recovery of Canada and Morocco in 2006 9
World Lead Metal Output Annual Change: 2006 Distribution Germany 5% USA 17% 2005 +7.8% 2006 +3.4% Others 48% China 30% 10
US Lead National Stockpile '000 tonnes stockpile '000 tonnes disposal 600 100 500 400 300 200 100 0 US Lead Stockpile Annual Disposal 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Aug. 90 80 70 60 50 40 30 20 10 0 11
China Lead Trade '000 tonnes 600 EXPORTS 400 200 0-200 -400-600 IMPORTS 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005f 2006f Concentrates Metal 12
Lead Metal Western World Balance '000 tonnes 100 50 0-50 -100-150 -200-250 1999 2000 2001 2002 2003 2004 2005f 2006f 13
Zinc Stocks and Prices '000 tonnes 1400 US$ per tonne 2000 1200 1000 800 600 400 200 September 2005 1800 1600 1400 1200 1000 800 600 400 200 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 0 LME Stocks LME Cash Settlement Price 14
World Zinc Usage In 2005 growth in China, India and Rep. of Korea will be balanced by reductions in Europe and USA Growth of 5.7% forecast in 2006 15
World Zinc Mine Output Annual Change: 2005 +3.6% China 24% 2006 Distribution Australia 14% Others 50% 2006 +4.2% Peru 12% 16
World Zinc Mine Output Opening of Mount Garnet and Black Star in Australia and Lanping in China Expansion of Hindustan Zinc s Indian operations Production in Mongolia and Philippines 17
World Zinc Metal Output Annual Change: 2005 +1.5% China 26% 2006 Distribution Japan 6% Korea Rep. 6% 2006 +3.5% Canada 8% Others 54% 18
World Zinc Metal Output Opening of 100kT refineries at Lanping and Jiyuan in China Commissioning of 170kT refinery at Chanderiya in India Increases in Brazil, Japan, Kazakhstan, Namibia and Vietnam 19
China Zinc Trade '000 tonnes 600 500 400 EXPORTS 300 200 100 0-100 -200-300 -400 IMPORTS 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005f 2006f Concentrates Metal 20
Zinc Metal Western World Balance '000 tonnes 400 300 200 100 0-100 -200-300 -400-500 1999 2000 2001 2002 2003 2004 2005f 2006f 21
2004 Metal Production China is No.1 in Zinc 2004 Metal Consumption (000 tonnes) (000 tonnes) China 2518 China 2470 Canada 805 USA 1252 Japan 635 Japan 623 22
China s Growing Influence in Zinc 25 20 15 % 10 5 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 % World Metal Output % World Metal Consumption 23
000 tonnes 3000 Chinese Zinc Mine and Metal Production 1980-2004 2500 2000 1500 1000 500 0 Source: CNIA 1980 1982 1984 1986 1988 1990 1992 1994 1996 Mine Metal 1998 2000 2002 2004 24
Unique Structure of Chinese Zinc Industry More zinc mines and smelters in China than rest of the world combined Majority have capacity of less than 10,000 tonnes/year 25
Big 4 Chinese Zinc Metal Producers Producer Province Production (000 tonnes) 1997 2000 2002 Lingnan Guangdong 118 167 170 Huludao Lioaning 318 324 222 Zhuzhou Hunan 243 277 266 Baiyin Gansu 121 143 135 Total Major Producers 800 911 793 Total China 1434 1957 2106 %share of major producers 55.8 46.6 37.7 Source:CNIA/Antaike 26
China s Net Trade in Zinc Concentrates and Metal 1980-2004 000 tonnes 600 500 400 Exports 300 200 100 0-100 -200 Imports -300-400 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 Source: Chinese Customs Net Conc Trade Net Metal Trade 27
China Trade Chinese imports in 2005 are forecast at ¼ million tonnes Much of this will be sourced from Kazakhstan Exports will continue to decline 28
Zinc First Uses in China Miscellaneous ZnO/Lithopone Galvanising Zinc Strip Brass and Bronze Source: Antaike/ILZSG Zinc Alloying 29
Different Pattern of Zinc Usage in China Zinc strip consumed in dry battery industry (China accounts for 1/3 of world output) Lithopone used in rubber and plastics industries Growth in use of galvanized steel relatively recent 30
Chinese Zinc Consumption 1980-2004 000 tonnes 2800 Source: CNIA 2400 2000 1600 1200 800 400 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 31
000 tonnes 12000 Apparent Consumption of Galvanized Steel in China 10000 8000 6000 4000 2000 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 Source: China Metals 32
Growth Prospects are Good In terms of floor space construction activity has doubled in past 5 years Housing starts have risen by ⅓ 2008 Olympics in Beijing 2010 World Exposition in Shanghai Production of fridge freezers rising by 15% per year Production of air conditioning units rising by 30% per year 33
Chinese Vehicle Population and Production 1980-2003 000 units production population, 000s 5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0 Vehicle Production 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 Source: China National Automotive Industry Corp/SMMT Vehicle Population 16000 14000 12000 10000 8000 6000 4000 2000 0 34
Vehicle Population Densities 2003 India China 91.8 Indonesia 35.1 Brazil 8.6 Mexico 5.5 Taiwan, China 3.7 Korea Rep. 3.3 European Union 1.8 Japan 1.8 United States 1.3 99.6 persons per vehicle Source: SMMT 35
Conclusions for zinc & lead Market fundamentals to continue to be main price determinant China will be major influence on fundamentals Hedge/pension funds impact only on short term trends 36
Perspectives sur le Plomb et le Zinc Previsions a Court Term et Developpements Futurs Journees Nationales du FDIM 23-25 November, 2005, Marrakech 37