Exports in 1998 were 1,64,000 tonnes. "Although (South Korea producers') zinc export target is 1,80,000 tonnes this year, we anticipate exports will be less than the target due to rising local demand," said a senior trader with Korea Zinc Co Ltd, the country's largest producer.

Korean demand for refined zinc has been improving as the local automobile industry has shown increased sales for the first quarter, he said. Three local carmakers said in early April their sales rose to 5,57,185 units in the first quarter of this year from 4,29,824 in the same period a year earlier. South Korea's zinc exports were 40,000 tonnes in the first quarter of this year, up 5.4 per cent from 37,960 tonnes in the same period a year ago, the senior trader said. South Korea's zinc export markets are Taiwan, Southeast Asia and the US, he said.Domestic sales were 64,000 tonnes in the first quarter, up 22.8 per cent from 52,130 tonnes a year ago, he said.

South Korea's refined zinc output rose to 1,02,200 tonnes in the first quarter from 99,400 tonnes in the same period last year. South Korea has only two refined zinc producers - Korea Zinc and Young Poong Corp. The two set their output target for this year at 4,29,000 tonnes, up from 3,90,500 in 1998, the senior trader said. The set their domestic sales target at 2,50,000 tonnes, up from 2,24,000 tonnes last year. The two companies have tried to ship more metal overseas to make up for slumping domestic demand after the country's financial crisis early last year, which slashed demand from the domestic automobile and construction sectors.

Another trader said a slower recovery in the construction sector than in cars, together with a gloomy outlook for steel exports due to anti-dumping rules set by the US and European Union, would put a lid on the pick-up in Korean demand.

"Without demandrecovery from the local construction sector, we cannot see a full recovery in local demand," he said. The Korea Iron and Steel Association said the country's steel exports were likely to fall 34 per cent to 3.02 million tonnes in the second quarter of 1999 from the same quarter a year ago due to the anti-dumping restrictions.

But domestic demand for steel products was forecast to rise 15 per cent to 6.96 million tonnes in the second quarter from a year ago due to improving business in the automobile, shipbuilding and machinery industries, it said.