COMMENTARY — Galvanizing and the zinc market

Increasingly, the demand for zinc has come to rely on the galvanizing sector. According to the latest figures from the International Lead and Zinc Study Group, consumption in this sector rose by some 31% between 1979 and 1993 at an average annual rate of 2.2%.

Meanwhile, demand in other end-uses either fell or stagnated during the same period. In 1979, galvanizing accounted for around 41% of total zinc demand, and by 1993 its share of the market had increased to just over 48%. Although the construction industry (mainly non-residential) remains the major consuming sector of galvanized products, the growth in demand during the past decade has, to a considerable extent, come from the automobile industry. During this period, considerable advances were made in increasing the durability of automobile structures, one of the most important measures being the introduction of zinc-coated steels in a variety of forms . . . The recessionary conditions that prevailed in the early 1990s also had an untoward impact. But by 1993 a new high of 673,000 tonnes had been recorded, as a number of new galvanizing lines came on-stream. Between 1990 and 1994, a total of 12 new galvanizing lines, with a combined capacity of 3.9 billion tonnes per year, was introduced in North America. Most of this new capacity was applied to the automobile market.

Furthermore, not only will galvanized sheet continue to increase its penetration of the automobile market, but there are signs of an increasing acceptance of galvanized material in construction end-uses . . . Overall, we can only conclude that the outlook for galvanized products worldwide is bright, and that zinc consumption in this end-use will continue to increase both in absolute terms and as a proportion of total demand for the metal. Indeed, galvanizing could well account for more than half of total Western zinc consumption this year and exceed 55% by the end of the decade. During the next two to three years, the demand for zinc within the automobile and construction sectors is likely to improve as these industries continue to recover from the recent recession. Looming ahead, however, is the threat of aluminum substitutes for car body panels, but the scope of this trend is by no means certain.

— From a recent issue of “Weekly Report” of Billiton Metals.