Feed additive suppliers and feed manufacturers will no doubt be fully aware of the increase in zinc oxide prices over the past few years. This will have caused some concern, not only for feed producers but also livestock farmers who are seeing their profit margins further squeezed.
As Mengyue Liu, Chief Lead and Zinc Analyst at Shanghai Metals Market, notes, “The price of zinc oxide has been rising since the end of 2015. While the price of zinc oxide in China has been up by 19% since the beginning of 2017.” Explaining how the increase is due to, “Stable output and surging consumption of zinc oxide in 2017 leading to a shortage of supply which resulted in the surge of the price.”
But while this may sound like simple economics, the picture is not that clear. As Scott Hine, Chief Innovation Officer at Novus International explained in a recent interview with feed industry journal AllAboutFeed. He stated that, “There are some reports circulating that point to a decrease in zinc availability, but there have been no fundamental changes in the market structure or dynamics that would lead to any imbalance of demand or supply. At this point in time, we are not suffering any raw material scarcity and have not been notified by our suppliers of any issues that could impact our zinc trace mineral availability in the short term.”
In an interview for the same journal, Bill Scrimgeour, president and CEO of Zinpro Corporation, outlined a similar belief, that zinc oxide supplies had not been effected, and had instead remained static and unblocked. He stated that, “Although global zinc stock levels have declined over the past 5 years, there has been no interruption of zinc supply to the market.”
While accepting the damage that price increases are causing, Scrimgeour still sees zinc oxide as good value, as it remains a vital feed additive. As he explains, “Raw material stock reductions and price increases of any kind do have the potential to negatively impact the cost of feed and customer profitability when it comes to zinc supplements, but what really matters is whether the product delivers improved animal performance, and ultimately drives greater producer profitability.”
Feed Additive Prices: Zinc Oxide’s Future
To find out more about the pressures that zinc oxide manufacturers and suppliers are facing, it is necessary to examine zinc supplies, the obvious raw material feedstock for zinc oxide.
If you wish to learn more about zinc oxide prices, feed additive markets, & agrichemical raw materials, then please take a look at the other articles on AGCHEMI’s blog page, including 4 Reasons to Ban; 4 Reasons to Buy Zinc Oxide Feed Additives, and Study Finds Potential Use for Zinc Oxide Nanoparticles as a Fertilizer Feedstock.
The industry journal MiningReview, offers a positive market outlook for zinc oxide, as it predicts increased production in the coming years, noting that, “Global mined zinc production will ramp up in 2018, as strong zinc prices prompt miners to bring idled capacity back online.” While It acknowledged that there was a dip in recent supply, it believes that to be only temporary, stating that, “While some capacity taken offline over 2015 - 2016 was due to permanent mine closures, the return of some stalled capacity and new projects in key countries will drive growth over the coming quarters.”
Chinese Zinc Output
MiningReview further outlined how much of this reduced supply was based on limited Chinese production, stating that, “China's zinc production will stagnate due to declining ore grades and increasingly stringent environmental regulations. Since August 2017, operations at about 60% of zinc and lead mines in Sichuan province have been suspended due to ongoing environmental inspections.” Adding that the future doesn’t look much brighter, as, despite growing demand for zinc oxide, analysts predict, “… the country's zinc production to edge higher, from 4.6 Mt in 2018 to 4.7 Mt by 2027, averaging 0.3% annual growth.”
Australian and Indian Zinc Output
Zinc production in Australia was limited in 2015, with the closure of Minerals and Metals Group's (MMG) Century zinc mine. However, rising prices are now encouraging miners to restart production, with Australian “zinc production growth forecast for 2018 and 2019, to be 12% and 8% respectively.”
Ultimately though, it is in India where some of the largest zinc production increases will be seen, as zinc output is predicted to increase, “from 783 000 t in 2018 to 1.7 Mt by 2027.”
Good News for the Feed Industry
Overall, global zinc production will expand and grow in line with demand for zinc oxide helping to keep price down. As analysts at Research and Markets state, “The forecast for the global zinc oxide market is for growth at a CAGR of 3.94% during the period 2017-2021.” While MiningReview forecasts that, “global mined zinc production is to increase by 3.5% year on year in 2018, to 13.7 mt, and rise to 16.6 mt by 2027.”
The news that zinc oxide prices should fall in the coming months will give many feed manufacturers a breathing space, as governments and public opinion apply further pressure on farmers to reduce antibiotic use as well as increase meat production.
It will also provide much relief for animal feed producers as they struggle to maintain top quality feed products despite rising raw material costs. For despite the relatively high price and the EU wide ban on feeding pigs zinc oxide coming into force over the next 5 years zinc oxide it remains a vital nutrient feed additive.
As Emmy Koeleman, Editor of the industry journal AllAboutFeed notes, “The outlook for global mined zinc production seems positive for the near future.” Adding that, “The reduced forecasted pressure on zinc prices is good news for the feed additive producers. Zinc remains a vital mineral for today’s high performing farm animals, and with increased pressure for farmers, the prices of feed and speciality feed ingredients must remain affordable to stay in business. Choosing a zinc supplement that delivers the strongest return on investment is important when trace mineral prices are high.”
For specific feed additive enquiries, you can contact AG CHEMI GROUP’s friendly sales team.
The AG CHEMI GROUP Sales Team
Photo credit: AllAboutFeed, AnimalsMatter, Mining, AuroraLifeScience, Cottonsfp, OKSprout, & MineralsEducation
