Rapid urbanization in the developing economies is expected to create growth avenues for Zinc demand in 2013. The global demand is expected to grow by 5% in the world but the growth in developing nations will be higher at 6.9% in 2012-2015. China and India is expected to grow sharply this year. Indian demand potential is much higher due to low per capita consumption rate.

The closure of some of the major world mines in next few years will be creating supply side bottlenecks in Zinc and that is expected to bring out the inventories that are still tugged in financing deals on LME.

The total mine openings in Zinc by the year 2013 will be of 350000 tonnes capacity, in which Xstrata is already planning to increase its production at Lady Loretta Mine by 2016. Now against the mine capacities coming up the amount of production that will extinct till 2016 are 1040000 tonnes.

This will create a gap of 690000 tonnes in the supplies, not taking into consideration other factors like economic slowdown. Therefore the existing inventories that are 1215275 tonnes in LME and 311701 tonnes in Shanghai warehouses will get challenged and might come down.

LME Zinc was last seen trading at $ 2035 per tonne, down $ 10 per tonne. MCX Zinc January expiry contract was seen trading at Rs 111 per kg, down 0.3%.

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Source:http://www.indiainfoline.com/Markets/News/Rapid-Urbanization-In-Developing-Countries-Will-Create-Demand-Avenues-For-Zinc/4672141628