Mohan estimated domestic zinc production through primary and secondarysources in calendar 2000 at 223,000 tonnes against a consumption of 280,000tonnes. He has forecast 1999 zinc consumption at around 2,64,000 tonnescompared with an output of 199,702 tonnes.

Mohan said higher production was expected mainly because of a rise incapacity at smelters operated by the state-run Hindustan Zinc Ltd(HZL)."HZL is stepping up its capacity by 10,000 tonnes per annum each at all thethree plants. We estimate that 50 per cent of this will be realised duringthe year 2000," Mohan said.

He said secondary zinc production would also rise because of governmentrelaxation of some zinc ash import rules. HZL and Binani Zinc are thecountry's primary producers of zinc, used mainly in the galvanisingindustry.

"We may produce an additional 10,000 tonnes of zinc in the new calendar yearcompared with the previous year," director (Finance) Hindustan Zinc Ltd NSRamachandran said. Analysts said HZL was stepping up capacities at its threeplants at Chanderiya and Debari in northern Rajasthan state andVisakhapatnam in southern Andhra Pradesh.

Consumption set to grow 6%
Ramachandran said the country's zinc consumption was expected to grow closeto six percent in 2000 on a year-on-year basis. "It will be about 5.5 percent, closer to six per cent for 2000," he said from the company'sheadquarters in Udaipur in Rajasthan.

He said if gross domestic product (GDP) growth was factored in at six percent, the growth in zinc consumption could be around similar levels.But given low per capita consumption of zinc, the domestic demand could onlyrise, he said. Per capita zinc consumption was around 0.5 kg compared with3.0 to 5.0 kg in growing economies, he added. Mohan estimated the country'slong-term zinc consumption to grow by about seven per cent.

Ramachandran said the country met about 70 per cent of its consumptionthrough indigenous sources, the rest through imports. "Imports may remainconstant by and large," he said. A Bombay-based analyst with a foreignbrokerage estimated zinc supplies in 1999/2000 (April-March) at 1,80,000tonnes against a demand of 2,44,000 tonnes, the shortfall of 64,000 tonnesmade up from imports.

"In 2000/2001, I estimate the supplies at 1,85,000 tonnes and demand ataround 2,69,000 tonnes," the analyst said. He expected zinc firms to end1999/2000 with higher profits because of a slight improvement in global zincprices and lower domestic taxes.

Prices to stay steady
Ramachandran said he did not expect any major changes in global or domesticzinc prices in calendar 2000. "As of now I see no major changes in zincprices... perhaps prices may come down but will remain in the same band," hesaid and expected that the prices to follow a similar trend in 2000. "Pricesare expected to be in the $1,150 to $1,200 per tonne band," Mohan said.

He said Binani Zinc's capacity was expected to increase to 60,000 tonne ayear during the next five years from 30,000 tonnes. HZL's 1,00,000 tonnesper year zinc smelter in Rajasthan is expected to go on stream by March2004.

-- REUTERS