Operational Results

Conditions of the Industry

World Market
2001 was a difficult year for the zinc industry, which like most industries, suffered greatly from the downturn in world economic conditions. Due to the sluggish economy, world-wide demand for zinc metal declined for the first time in 8 years, reaching only 8.75 million mt, a drop of 1% from year 2000 levels. Most notably, countries that are typically the top users of zinc metal, such as the U.S., whose economy slumped particularly during the last half of the year, and many countries is Europe and Asia recorded lower zinc consumption rates than the previous year. As a result, zinc inventory levels at the LME warehouse totaled 433,000 mt at year end, an increase from 238,000 mt in 2000.

Zinc metal prices also fell dramatically during the last six months of 2001, to an average of USD 886 per mt, a drop of 21% or USD 242 from the previous year, impacting the revenues of zinc smelters throughout the world.

Domestic Market
In 2001, zinc related industries remained more active than the general domestic economy. As a result, demand for zinc metal rose 9% from the year 2000, to a total of 98,170 mt.

Zinc Metal Sales Volume
During 2001 the company’s overall sales volume totaled 105,697 mt, an increase of 5% over 2000, due primarily to higher sales of zinc specialty products ,consisting of zinc diecast alloy #3 and the newly product zinc CGG alloy #21. Sales of these specialty products grew nearly 30% to 30,207 mt.

Domestic Sales
The company sold 79,220 mt in the domestic market, an increase of 9% from the previous year, or 75% of sale volume.

Export Market
Accounting for 25% of total sales, exports are still very important to the company’s marketing mix. The primary export destination for zinc ingot is Taiwan and ASEAN member countries, while Hong Kong is the significant market for zinc alloy. However, with greater emphasis being placed on sales to the domestic market, export sales decreased by 5% compared to the year 2000.

Industry Competition
With the global slowdown of the economy, the competition within the zinc metal market has become more intense. The company’s chain competitors are regional producers including China, Australia and South Korea. Nevertheless, in Thailand, the company still leads its rivals in terms of service and price. The company provides customers with prompt and timely delivery over imports, reducing any financial burden associated with keeping stock on hand. Moreover, the technical service provided by the company, in addition to price competitiveness, is unmatched by foreign competitors.

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