Bloomberg News

Zinc Use in China Seen Stronger by CRU on Construction Spending

March 22, 2013

Zinc usage is strengthening in China, the world’s biggest consumer of the metal used to rust- proof steel, as the state finances spending on building, according to researcher CRU.

“Orders are picking up sharply,” London-based analyst Graham Deller said by phone. “The bulk of zinc used in China is within domestic construction. The uptick in construction orders, especially government-funded construction, which happened the third and fourth quarter of last year -- that’s feeding into physical demand. Galvanizers have a lot of business.”

Zinc sheet is used “extensively” in construction in areas including roofing and gutters, the International Zinc Association says. China’s government said in 2011 it planned to build 36 million units of social housing by next year. The nation accounted for 44 percent of global zinc demand last year, according to JPMorgan Chase & Co., and 53 percent of its usage was for construction and infrastructure, RBC Capital Markets Ltd. estimates.

“There’s been a big change in sentiment in China since they came back from holidays,” Deller said today, referring to last month’s weeklong Lunar New Year celebration. “They seem to have switched in the last month or so from everyone being very depressed to everyone being optimistic.”

Zinc demand in Europe is “flat to down,” while consumption in North America “still seems to be doing OK,” driven by demand from the auto industry, Deller said. “There do seem to be signs of optimism in the construction sector as well,” he said.

Medium-gauge steel sheet that’s been galvanized, or coated with zinc, by being passed through a bath is used mainly in body panels for cars, according to the association.

To contact the reporter on this story: Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net


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