Review of zinc consumption fulcrum in 2021 and prospects for new growth points of consumption in 2022 [South China Annual meeting 2021]

"SMM South China Annual meeting | an in-depth Analysis of the Global economy, Copper, Aluminum and Zinc fundamentals and Price trend in 2022

SMM December 10: at the 2021 SMM South China Nonferrous Metals Industry Annual meeting, Zeng Tong, research director of Jinrui Futures Research Institute, explained the theme of "Zinc consumption in 2022". He first reviewed the fulcrum of zinc consumption in 2021, and then detailed the possibility of 2022 consumption in terms of infrastructure, UHV, high-speed rail, 5G communication tower, photovoltaic and wind power.

The fulcrum of consumption in 2021

According to the feedback of the survey sample, the performance of zinc consumption in the north is bleak in 2021, while the consumption in the south is good.

From 2019 to 2021, the operating rate of galvanizing enterprises, zinc oxide and die-casting zinc alloy enterprises decreased significantly compared with the previous two years, and the operating rate of die-casting alloy and zinc oxide performed well.

As for the regional discount, according to its trend, the regional discount is also more consistent with the feedback of enterprises, the Southern Reserve is not the usual premium, and Tianjin is the unusual discount.

From an intuitive point of view, both domestic zinc ingots and dumping stocks increase the supply of zinc, but the final inventory increase is not obvious. This is enough to prove the outstanding performance of consumption in 2021. According to statistics, zinc consumption increased by 5% in 2021, a new high in recent years.

But it is worth mentioning that both real estate and infrastructure are weak in 2021, so where is the growth point?

On the one hand, the increase in automobile production has driven the consumption of zinc to a certain extent, on the other hand, the export of primary processed products is exuberant, especially copper-nickel, copper-nickel-zinc alloy and aluminum-zinc alloy plating or coating.

The possibility of consumption in 2022

In previous years, China exported about 10-150000 tons of zinc ingots every year in the form of galvanized products, and this year it has exported a total of 380000 tons of galvanized products. On the one hand, the overseas primary processing industry is being repaired, on the other hand, overseas terminal consumption has also recovered. So, is there still room for overseas primary processing in 2022 to provide its own terminal needs?

From the comparison of the growth rate of galvanizing production in the United States, Europe and Japan, the United States has the lowest growth rate, followed by Europe, and Japan has the fastest growth rate.

But in fact, looking at the recovery of galvanizing overseas alone, including the United States, Latin America, Western Europe and Asia (except China) galvanizing production has not returned to the 19-year level, and is still some way from the peak reached in the past. Therefore, it can be concluded that there is room for overseas primary processing to continue to recover, and even to meet more terminal demand growth.

In addition, the nine export tax rebates for galvanized products cancelled in 2021 are not conducive to galvanized exports next year.

What are the ways to make up for the decline in real estate consumption? Infrastructure?

From the distribution proportion of primary consumption of zinc, infrastructure construction, construction, transportation and consumer durables are the main consumption categories. However, judging from the growth rate of infrastructure, the growth rate of infrastructure during the year is quite slow.

It is expected that UHV construction will provide some zinc consumption in 2022. According to the chart of the projected total growth of UHV lines from 2019 to 2025, UHV lines are expected to continue to increase by 2022.

In 2022, the cumulative length of domestic UHV lines is expected to reach 37767 km.

High-speed rail:

A total of 23 high-speed rail lines are planned to be opened in China from 2021 to 2022, according to data released by the railway construction plan. What is clear, however, is that high-speed rail construction has declined year by year from 2020 to 2021 after a wave of explosive growth in 2019.

5G communication tower:

With the rapid development of 5G, the three major domestic operators are also constantly investing in the construction of 5G infrastructure. It is expected that by 2022, the number of new 5G infrastructure built by the three major operators will reach a peak, and then the growth rate will significantly slow down.

Photovoltaic and wind power:

According to the change of the new installed capacity of photovoltaic in China, the new installed capacity of domestic photovoltaic increased sharply in the fourth quarter of 2020. After entering 2021, the growth rate of new installed capacity has slowed down. Some media predict that by 2025, the demand for photovoltaic installed capacity is expected to increase 375GW compared with 2020. 856GW is expected to grow by 2030.

In terms of wind power, the use of zinc in wind power is concentrated on wind turbine towers and bolts, and the volumes of fans with different installed capacity are very different. We use 2MW fans when we estimate, but the proportion of large capacity fans in the industry trend is gradually increasing.

It is estimated that during the 14th five-year Plan period, the minimum zinc consumption for the construction of wind power equipment will be 450000 tons, with an average annual zinc consumption of about 90,000 tons for the wind power industry, and a maximum of 1.14 million tons for zinc consumption. the average annual consumption is about 228000 tons.