The ILZSG forecast for 2012 is out. There are positives and negatives. Firstly they forecast a zinc supply surplus of 250,000kt for 2012. This up from their forecast of 135,000kt from last year (made in 2011) for 2012.
On the positive side of the ledger it confirms that the surplus is slowing. Last year the surplus was 317,000kt, so 67,000kt of supply has evaporated.
They key explanation for the change is that they rejigged Chinese demand numbers, which makes a big difference. They forecast just 7% demand growth in 2012 from China. Now China consumes 5.5mt a year and demand tends to match GDP growth, so with GDP growth at 8.2% currently the ILZSG forecast looks a little to the low side. This difference of 1.2% equates to a possible increase in Chinese zinc demand of a further 60,000t.
That leaves me to conclude that the middle ground and a surplus of about 190,000kt looks currently more realistic for 2012 and means about 127,000kt of less supply hitting the LME this year. Slowly but surely the surplus is evaporating.
Once I check the data more thoroughly, I'll update the new mine/closure list to see how much supply is evaporating in 2013, which at this stage looks like -200,000kt.
KZL Price at posting:
12.0¢ Sentiment: Hold Disclosure: Held
