Consumer durables, cars turn costlier on zinc prices

KOLKATA: With zinc prices zooming, users such as consumer durables, auto and battery makers are facing pressure on their margins and are being forced to increase prices.

The prices of zinc, used as a galvanising agent for making steel corrosion-resistant, are expected to remain firm in the next couple of months and analysts say user industries will revise prices further if the trend continues.

Reacting to buoyant raw material prices, JSW Steel and SAIL have raised the prices of flat steel products such as galvanised coils and sheets which go into the manufacture of automobiles and durables like washing machines and refrigerators.

Backed by global price trends and a firm demand in domestic market, spot prices have zoomed in line with the strong price trend in copper and other base metals. On the benchmark London Metal Exchange, zinc prices were hovering at $2,400 per tonne on January 11. The MCX price is hovering around Rs 110 per kg.

Analysts said zinc is gradually coming out a prolonged slumber. “In May 2006, prices had touched $4,600 per tonne. But post-global recession, prices slid drastically and a number of zinc miners were forced to close down operations. Now prices have started moving upwards because of a renewed demand from Asia and the US. This rally is expected to continue till the second half of this year,” said Mr Biren Vakil of Paradigm Commodities.

“In the international market too, the outlook for base metals in 2011 is expected to remain strong on the back of a strong demand from BRIC countries, especially China and India,” a Hindustan Zinc (HZL) official said. Incidentally, India has emerged as a key player in the global zinc market thanks to HZL, the largest integrated producer of zinc in India. HZL dominates 80% of the market in India, it is part of the Vedanta group.