SHANGHAI, Oct 18 (SMM) - With the recent spike in raw materials prices, it is very difficult for indirect-process zinc oxide companies to survive if downstream sales prices do not increase. Since 2010 to date, the concentration of the zinc oxide industry has gradually increased, with the number of enterprises falling from more than 700 to around 150 as of today. However, although the concentration of production capacity has increased, the issue of overcapacity is very serious, mainly caused by the intensive competitions among the companies.
The concentration of the indirect-process zinc oxide industry will further increase in the future. According to the development trend in Europe, the United States and Japan, there may only be about 50 enterprises that can survive the current competition out of the current 150 enterprises in China. Some companies may be eliminated due to the increasingly stringent environmental inspection requirements. On the other hand, the indirect-process zinc oxide industry is plagued by rising labour costs, the ageing workforce and a lack of new talents. The industry is therefore bound to develop towards automation and intelligence in the future.
Zinc chloride has a wide range of applications in over 20 industries. Compared to zinc oxide, however, the market demand for zinc chloride is small. According to company statistics, the global demand for zinc chloride is around 150,000 mt, while the demand for zinc chloride in China stands at around 80,000 mt or less. However, despite the low demand, competition in the industry is quite fierce.
The zinc chloride industry is more niche than zinc oxide, and currently the supply exceeds the demand. Therefore, it will be optimal for each company will take advantage of its own strengths to make the industry more sophisticated.
At present, the global production capacity of zinc sulphate stands at about 900,000 mt, but the operating production capacity is around 800,000 mt. The domestic production of zinc sulphate is 300,000 mt, which is mainly used in the chemical industry, agriculture and other fields. While the production capacity of active zinc oxide is about 150,000 mt, and the output is around 120,000 mt, which is mainly used in rubber, feed, glass and other fields. At present, the orders have been abundant, and the prices of the main raw materials and auxiliary raw materials have been rising all the way up. But because of the environmental protection requirements and other factors, the overall performance has not been very inspiring.
In the future, the technology of zinc sulphate enterprises will gradually become standardized, followed by an increase in the concentration of the industry and the integration between the upstream and downstream to form a complete and comprehensive recycling industry chain, which is also the key to the production of high-end products through standardized, intelligent, low-carbon, and green development.
The proportion of secondary zinc in the whole zinc industry is not as large as the proportion of secondary lead, and the distribution of zinc resources is relatively scattered. If the recycling rate of zinc could be increased by 30%, this would be sufficient in terms of recycling, and this is where the whole industry is heading. However, the secondary zinc and hazardous waste industry is currently facing "three challenges", including 1) the rising energy prices, including natural gas, coal and electricity; 2) the tightening environmental policies and heightening requirement forms zero emissions, meaning higher operating costs; 3) the increase in labour wages. And the rising zinc prices also constitute the headwinds. Overall, however, the secondary zinc and hazardous waste sectors are doing well.
As the country with the largest zinc-related production capacity, China has the obligation and responsibility to address the problem of the waning talent in the industry, to empower the industry and to upgrade the level of equipment. The companies in the industry chain should also work together to promote the development of intelligence and automation in the industry.
