A continuation of global economic growth over the medium-term should ensure strong zinc usage in the construction industry, the International Lead and Zinc Study Group said Monday.
At the same time, zinc demand in the public infrastructure sector should be strong in both the developed and developing world, said the ILZSG.
The construction and infrastructure sectors together account for over half of global zinc usage, said the ILZSG.
Within the construction sector, zinc is used for galvanized structural steel, roofs, facades, flashings, gutters and rainwater systems while within the public infrastructure sector, zinc is used for lighting columns, road crash barriers, railings and power transmission towers, the ILZSG said.
However, if zinc prices remain at such high levels, it could become a problem for zinc use in the construction sector, the ILZSG said, but will have a more muted impact on public infrastructure investment.
As public building standards are set by government and regional authorities and specify that zinc has to be used as a protector, it is less sensitive to price, said the ILZSG.
However, in the private sector, there are no such instances of mandatory zinc usage and therefore is subject to price fluctuations, the ILZSG said.
At 1100 GMT, three-month zinc traded at $3,200 a metric ton, down 30% from November's record high of $4,580/ton.
Adding to downward price pressure, the global refined zinc market reported a 50,000-ton surplus in January 2007, reversing a 31,000-ton deficit in the same month of 2006, a recent ILZSG report said. Refined zinc production in January was 941,000 tons while refined zinc consumption was 891,000 tons, the ILZSG said.
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