Bloomberg reported that Japan’s zinc demand may increase 7.2% this year to 4 year high as the economy recovers from an earthquake and tsunami and the weaker yen helps boost exporters.

Mr Nobuyuki Nakamoto GM at Mitsui Mining & Smelting Company said that demand will rise to 537,400 tonnes the highest level since 2008 from 501,200 tonnes in 2011.

Zinc, the second best performer among six base metals on the London Metal Exchange has gained 7.6% this year on signs economic growth is accelerating. Japan’s machinery orders exceeded all economists’ estimates in February, signaling gains in capital spending. An increase in demand may boost prices of the metal used to galvanize steel and benefit producers such as Korea Zinc Company, Nyrstar NV and Teck Resources Limited.

Nakamoto said that domestic consumption is recovering in an interview on April 9th 2012. We expect demand for rebuilding to emerge up at the end of this year or early next year. Japan’s March 11 disaster, the yen’s strength and Thailand’s worst floods in almost 70 years curbed demand last year from the auto and electronics parts industries. Reconstruction may require an additional 20,000 tonnes of zinc each year for about three years. The yen has fallen from a post-World War II high of 75.35 per dollar in October and traded at 80.88 today.

According to the International Lead and Zinc Study Group, Japan was Asia’s fourth biggest user in 2011 after China, India and South Korea. The country’s demand accounted for 4% of the world’s 12.7 million tonnes.

Mr Michael Widmer head of metals research at Bank of America Merrill Lynch said that the market may swing to a deficit in 2013 from a surplus this year. Surpluses have been declining at a steady pace since 2009 because of muted increases in mine supply. The market may swing into a deficit of 160,000 tonnes in 2013 from a surplus of 141,000 tonnes in 2012. Supply exceeded demand by 561,000 tonnes in 2011 down from a surplus of 699,000 tonnes in 2010 and 789,000 tonnes in 2009.

Source: http://www.steelguru.com/metals_news/Japan_zinc_demand_may_climb_to_4_year_high_Mitsui/259117.html