Hindustan Zinc Ltd. (HZL), which is owned by Vedanta, posted a consolidated net profit of Rs. 2,680 crores, up roughly 33% yoy. On account of increasing volumes of refined metal and silver, advantages from strategic hedging, higher zinc prices, and favorable exchange rates, operating revenue increased by Percent yoy to 8,336 crores. The CEO of HZL discusses the future, the state of the world’s supply, the movement of zinc prices, and other topics in an interview with Arun Misra.
Inflation causing a drop in consumer and company expenditure, rising interest rates, higher energy prices, higher input prices, and supply restrictions are some of the factors affecting demand (for zinc and other base metals). On the supply side, there have been rumors that European smelters have been placed on care and maintenance as a result of rising energy costs. Lead inventory at LME warehouses fell by 15% since the start of the fiscal year, while zinc inventories saw a severe reduction of 61% since the start of FY23.
In H1 FY23, domestic zinc demand remained constant. Project orders, which had previously stagnated, have now resumed, leading to strong growth in the structures, pipe, and alloy segments. Domestic automobile demand, particularly as we approach the holiday season, continues to be very strong and supports the domestic lead demand. Due to demand from data centers, banks, and ATMs, the industry’s battery section is also healthy. Due to price reductions and the holiday season, silver demand increased. There are supply-side restrictions, historically low zinc stocks, and no new mines planned for the near future. Thus, price increases are inevitable.
According to one school of thinking, shortages might cause prices to increase to about $3,700 per tonne. Another contends that the world would eventually adjust to the new circumstances and that zinc prices would stabilize at $3,100 per tonne levels, perhaps in another quarter. Both scenarios, in my opinion, are plausible given the current state of the world. We watch LME-indexed pricing in India. The cost per tonne is roughly $3,000. And in the near future, it might increase to $3,100. However, I do not anticipate any price volatility right away.
Therefore, based on my best prediction, the average price would remain at $3,000 per tonne for the quarter. Our run rate shows that we are on track to meet our forecast, which calls for mining metal production to be between 1,050 and 1,075 kt and refining metal production to be between 1,000 and 1,025 kt.