InvestorQ : What drives demand and supply of zinc?
Siya Saran made post

What drives demand and supply of zinc?

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Priyanka N answered.
2 years ago

Zinc is already the fourth most widely used metal in the world after Steel, aluminium and copper. Its biggest feature is that it is highly resistant to non-acidic atmospheric corrosion. As a result a coating of zinc on any surface is sufficient to ensure longevity under most weather conditions. In fact, galvanized steel can remain free of rusting by just applying a coat of zinc on its surface. Like in the case of lead, due to its anti-corrosive properties, zinc is also extensively used in automobile batteries to avoid leakages and damage to engines. Like in case of lead and nickel, zinc has a very long life and hence it can be used and recycled for a long time. Hence, recycled zinc is a major source of supply as far as zinc is concerned.

Nearly 50% of the demand for zinc comes from the need to galvanize steel and iron. Hence zinc demand has a high correlation with the construction industry. The second major consumer of zinc is the automotive industry which needs zinc for producing auto castings and also for lining the batteries to keep them corrosion free.

Most prices of zinc are approximations at a point of time and are subject to constant change. The metal has appreciated by nearly 100% since the first quarter of 2016. While the rally post September 2016 can be partially attributed to the Trump Trade, there was also a major demand/supply mismatch that happened in the year 2016. The Zinc production fell from 11.37 MT in 2015 to 10.74 MT in year 2016. While the demand for zinc also fell during the period, this is attributed more to an economic slowdown. This has resulted in a rise in price of zinc. Interestingly, the demand and supply of zinc have been on a downtrend after peaking out in 2014. Canada and Korea are among the major exporters of zinc in the world.