In the third part of a series of exclusive outlooks for the global metals markets in 2010, MINING DAILY and IBISWorld forecast likely movements in the sliver, lead and zinc sectors.
The performance of the silver, lead and zinc sectors is expected to deteriorate during the outlook period, as the positive effects of rising output and higher US dollar prices are offset by the firming value of the Australian dollar.
Performance will not be even, but is expected to fall during most years of the outlook period.
Australia’s mine production of zinc is expected to reach about 1.59 million tonnes by 2013-14.
Although this marks a substantial increase from the 2008-09 levels, it places zinc output only moderately above the 2007-08 level.
The demand for zinc is expected to recover solidly during the outlook period, as global economic activity recovers and, more particularly, construction activity rebounds.
After falling in 2008-09, zinc prices are expected to increase over the next five years, although actual and potential increases in supply will keep price rises moderate.
The co-production of lead with zinc ensures that its output will also expand over the period to 2013-14.
Australia’s lead output of is expected to amount to about 681,000 tonnes by that time, assuming that operations at Magellan’s Wiluna mine are restarted by then.
Lead prices are expected to increase somewhat over the next five years as global demand strengthens.
As most zinc-lead deposits also contain silver, Australian production is expected to increase alongside zinc.
By the end of the outlook period, silver production will amount to about 2,200 tonnes.
Silver prices are expected to increase as industrial production worldwide returns to stronger growth, boosting demand for the metal.
Matt Kaleel, of H3 Global Advisors, said he had bullish views on the direction of the silver market next year.
“The silver price is at about $17 per ounce currently and it would not be unreasonable if it reached $20 to $25 next year,” he told MINING DAILY.