July 18, 2011 -
PRLog -- We forecast modest growth in both demand and output of refined metals across most sectors in Australia over the forecast period to 2015. Lead is the exception to this rule, as we expect a reduction in output and demand, continuing the trend of the last five years. We forecast refined zinc output to grow by an annual average rate of 2.3% until 2015, reaching 568,000 tonnes. This growth is due to planned production increases at Nystar and Sun Metals' refineries. After rapid growth of 36% in 2010 to 199,000 tonnes, based on year-to-date figures, we expect zinc consumption to grow at approximately 3% a year from 2012-2015, reaching 231,000 tonnes. This is in line with our forecasts on the Australian economy as a whole. Steel output looks set to grow slowly by 3.5% to reach 7.9mn tonnes over the forecast period. We expect consumption of steel to be buoyed by positive GDP growth in Australia and a demand pull from the auto and infrastructure sectors, which we forecast will grow over the period. We see the production of nickel growing at an annual average rate of 2.3% until 2015 reaching 142,000 tonnes. This will be driven by a return to full production at BHP Billiton's Kwinana refinery and increased output at the joint venture between Glencore and Minara Resources at the Murrin Murrin refinery. Consumption of refined nickel is likely to increase by 2.1% in 2010 to 245,000 tonnes as the economy recovers, with an average growth rate of 1.5% per annum until 2015 when demand is expected to reach 265,000 tonnes. Similarly to nickel, we expect output of refined aluminium to grow over the forecast period to 2015, due to supply increases planned at Rio Tinto and Alcoa. We expect these expansion plans to drive growth at an average annual rate of 3%, in line with the historical trend. On the demand side we see steady growth until 2015, reaching 365,000 tonnes. Lead is the one metal for which we forecast declining output and consumption. In terms of production, neither of Australia's two refineries have expansion plans, and the largest, Port Pirie, has experienced falling output for five years. As yet there have been no plans announced by other companies to set up a refinery in Australia and thus the country looks set to continue its trend of falling production levels. In terms of consumption, we forecast a growth of nearly 20% to 227,000 tonnes in 2010, based on year-todate figures. However, this is likely to mark just a blip in the longer term declining trend in demand. Indeed we forecast an annual average fall of nearly 2% until 2015 when output is likely to reach 206,000 tonnes. This decline is in line with the historical trend. The majority of Australia's refined metal output is for export, with Asia, and particularly China, accounting for the largest share. We therefore assign downside risks to our forecasts on the back of an expected slowdown in Asia's economic growth in 2011. Domestic demand for Australia's refined metal production is dependent on the country's economic growth rate, and we forecast modest growth until 2015 as the economy gradually recovers from recession. However, any reduction in the growth rate would have a detrimental effect on consumption levels for metals.
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