Editorial


Pb & Zn demand growth hinges on infra spending

 

India's Covid-19 crisis shows no signs of abating. For the past few weeks, the nation registered more than 300,000 new cases every day, though analysts believe the true figure is even higher. Nonetheless, facing mounting demands for the government to enact a national lockdown in order to reduce the rate of infection, Prime Minister Narendra Modi has so far refused, citing the economic effects on an already struggling population. In addition to this horrific human disaster, the crisis is having an impact on India's near-term economic recovery as trade is restricted and local restrictions being imposed. This will undoubtedly have an effect on the country's manufacturing sector.

 

State governments, on the other hand, have replied by limiting the mobility of the people in order to reduce the spread of the pandemic and encouraging only essential businesses to continue operating.

Such restrictions are having a significant effect on the economy and, as predicted, the lead and zinc markets.

According to data from the automobile industry, which is a large consumer of lead batteries and galvanised steel, new vehicle sales have declined. In April 2021, wholesale automotive dispatches were affected, with most automakers showing a decrease compared to March.

On the supply side, the mining industry overall is also badly affected due to the controls on the movement of people and goods to limit the spread of the pandemic.

However, in the long run, huge post-pandemic economic recovery initiatives centred on public spending and investment, proposed by major economies such as Europe and the United States, will aid optimists in lead and zinc market recovery and thus their prices.

Companies are now more able to deal with industry shocks than they were the previous year, and they are pinning their hopes on the current vaccine campaign.

Furthermore, apex body the International Lead and Zinc Study Group (ILZSG) predicts that global production of refined lead metal will outnumber demand by 96,000 tonne in 2021. After falling by 5.2 percent in 2020, global demand for refined lead is forecast to increase by 3.9 percent this year to 11.97 million tonne, with consumption rising in most countries and regions across the world, but most notably in Europe, India, Japan, and the Republic of Korea.

It also predicts that global demand for refined zinc metal will grow by 4.3 percent to 13.78 million tonne in 2021, up from 3.9 percent last year.

Overall, heavy infrastructure investment on highways and bridges, bridge maintenance, airports, rail, factory facilities, and the power grid would necessitate the use of steel, and hence galvanising for corrosion protection.

In addition investments in renewable energy production may provide an incentive for an increase in lead demand as a result of the anticipated substantial growth in the energy storage industry.