Zinc prices are yet to rebound and are expected to be in the $2,800–3,000 per tonne range with economic slowdown parameters deepening in Europe, concerns over production cuts in China and inflation worries in the USA, says Arun Misra, CEO, Hindustan Zinc Ltd.

London Metal Exchange stock positions are at their lowest in recent times, and production cuts have happened across global majors. LME stocks in April was around 45,000 tonnes as against 1,40,000 tonnes in the same period last year.

Similarly the stocks at SHFE warehouses (Shanghai Futures Exchange) were at 97,000 tonnes in the beginning of April this year, as against 1,76,000 tonnes during March-end 2022. These are multi-decade low numbers, says Misra.

Also read: Hindustan Zinc has not shelved plans to acquire Vedanta’s overseas mines

“Though the last quarter (January–March) started off on an optimistic note with China opening up, it was short-lived. The banking crises, continuing inflation in the US, power availability concerns in the Europe, and China not yet showing any strong signs of economic recovery has resulted in broader market sentiments remaining weak. Zinc supply and demand factors continue to underperform,” he told businessline.

Consumption Patterns

The Vedanta-owned subsidiary and the country’s largest zinc miner, Hindustan Zinc, expects global demand to grow in the 2.5 per cent range, at most 3 per cent. India which is a “bright spot” at the moment — is expected to see demand grow at 4-5 per cent; with upcoming elections leading to a thrust on infra projects.

Global consumption of zinc fell over 3 per cent in 2022 (calendar year) with China’s construction sector yet to gain the requisite momentum. Zinc is the world’s fourth largest consumed metal after iron, aluminium and copper.

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Smelter bottlenecks are said to have caused a supply deficit of 3,00,000 tonnes in 2022 and around 1,50,000 tonnes in 2023, as per analysis of the International Lead and Zinc Study Group.

Analysts say, a sharp rise in annual benchmark smelter processing fee could incentivise a turnaround in the metal production. However, the scale of rebound, depends particularly on power availability in Europe and China. “India is expected to fare better in terms of demand. It is like a bright spot amidst global recessionary pressures,” Misra said.

Mines in India

According to him, the company is also in discussions with the Centre and State governments to open up new mines in Rajasthan and Gujarat for auctions. Once open, Hindustan Zinc is keen to bid for them as these are put up for auctions.

“There are some mines in Rajasthan and Gujarat, and we are talking to the Centre for earmarking them for auctions,” the CEO said.

On the overseas mines, Misra said, the matter will be taken up once some closure happens on the acquisition of overseas mines of parent company, Vedanta.

The company has around ₹10,000 crore of borrowings on its books. But these continue to be “short-term”.

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