ISRI ROUNDTABLES: Even Laggards Might Get a Lift

Lead and zinc are not metals with momentum in the competitive materials market, speakers at the Institute of Scrap Recycling Industries Inc. (ISRI) Commodity Roundtables seemed to agree.

But even these somewhat lagging metals should enjoy some overdue increases in trading value if the economic recovery continues into 2004.

Speaking at the ISRI Lead/Zinc Roundtable Wednesday morning in Rosemont, Ill., metals industry analyst Kamal Naqvi with Macquarie Bank, London, predicted that both lead and zinc prices should enjoy an average increase on the LME market in 2004, with zinc moving from its 2002 average of 35.3 cents per pound up to 43 cents in 2004. Lead’s predicted increase was up from its 20.5 cents per pound average in 2002 to a 25 cents average price in 2004.

“The recovery has started,” Naqvi declared, adding that forecasters at his own bank “are believers in the recovery. You can question how long it can go for, [but] certainly for the next few quarters we remain quite optimistic.”

As with other basic materials, however, much of the growth now and in the near future is emanating from China as opposed to North America or Western Europe.

Two additional speakers, London-based consultant Colin Woodcock and Graham White of Considar Metal Marketing, Toronto, addressed China’s escalating presence in the two metals markets.

“Chinese zinc consumption has tripled in 10 years,” White told Roundtable attendees, adding that the refining and smelting of the metal “continues to shift from the Western World to China.”

Woodcock recited a number of lead smelter closings in Western Europe, citing a period of slow demand for finished lead and production shifts to Eastern Europe and China.

Even during an economic recovery, Woodcock remarked that, “The future for both producers and consumers of lead in Western Europe looks extremely challenging.”

Naqvi noted that both metals are losing ground to aluminum, copper, stainless steel and other materials in the overall materials markets. Concerning lead, Woodcock noted that the lead-acid battery industry worldwide “is the saving grace for the lead industry.”

But the overall economic recovery should spark a short-term demand increase for zinc and lead, although at a less impressive rate than demand growth for aluminum, copper and stainless steel.

The price increases predicted by Naqvi should result from that increased demand combined by lower mined production levels for the metals and, in the case of lead, a diminished supply in LME warehouses and other inventories.