Johnson Matthey Releases "Platinum 2008 In...
LONDON, November 18 /PRNewswire/ -- Platinum
Platinum Market Forecast To Be In Deficit by 240,000 Oz in 2008
The platinum market is forecast to show a deficit of 240,000 oz in 2008
according to Platinum 2008 Interim Review, released today by Johnson Matthey.
Supplies of platinum are expected to fall 4.2 per cent to 6.28 million ounces
while demand is set to decrease by 2.3 per cent to 6.52 million ounces. Tight
fundamentals drove the price to a record $2,276 per ounce in March. However,
the onset of the global financial crisis led to heavy sales by investors and
the price ended September at only $1,004.
Global Supplies Expected to Fall, With Decrease Greatest in South Africa
Platinum supplies are forecast to fall by 275,000 oz to 6.28
million ounces in 2008. Electricity supply problems, smelter outages, a lack
of skilled staff and other challenges are likely to drive South African
platinum supplies 250,000 oz lower in 2008, to 4.78 million ounces.
Production of platinum from Russia is expected to fall to 855,000 oz but
North American and Zimbabwean platinum supplies should increase.
Autocatalyst Demand for Platinum Set to Climb Again in 2008
Gross global platinum demand for the production of
autocatalysts will grow by a forecast 85,000 oz to 4.23 million ounces in
2008. North American demand will fall by 305,000 oz as vehicle production
slows. However, this decline will be outweighed by higher use of platinum in
diesel particulate filters on light duty vehicles in Europe than in the
previous calendar year and by growing automobile output in China and in other
developing economies.
Jewellery Demand Hit by Price Volatility and Increased Recycling
Net purchases of new metal by jewellery manufacturers are
forecast to fall by 340,000 oz to 1.12 million ounces in 2008. High metal
prices encouraged careful stock control in every region and negatively
affected the affordability of platinum jewellery in the first half of 2008,
while the recycling of old platinum jewellery increased markedly in Japan.
However, the recent decline in the platinum price has allowed the industry to
replenish stocks and has cut the level of recycling, stimulating some
recovery in demand.
Physical Investment Accentuates Platinum Price Volatility
Platinum investment demand is likely to fall by 25,000 oz to 145,000 oz
in 2008. Large stocks of metal were acquired through the Exchange Traded
Funds in the first quarter as the price rose, removing liquidity from the
market and intensifying the price increase. Redemptions in the third quarter
released metal back to the market and helped drive the price lower. Japanese
physical investment demand responded differently with metal sold back to the
market in the first quarter and strong purchasing seen in the third quarter
of the year.
Platinum Expected to Trade Between $700 and $1,400 in the Next Six Months
The fundamentals of the platinum market remain relatively
positive despite the current economic climate. However, the substantial sales
of platinum by hedge funds in the third quarter of 2008 demonstrate the
importance of investor sentiment to this metal. Should the present economic
crisis continue, platinum could trade as low as $700 during the next six
months if investors shun commodities. Conversely, if appetite for risk
returns, the price will more closely reflect fundamentals and platinum could
trade as high as $1,400 within this period.
Palladium
Palladium Surplus Forecast to Fall to 320,000 Oz in 2008
The palladium market is expected to be in surplus by 320,000
oz in 2008. Demand is forecast to climb by 3.8 per cent to 7.19 million
ounces, with strong demand from physical investment through ETFs largely
responsible for this increase. Global palladium supplies are set to fall by
12.5 per cent to 7.51 million ounces, mainly due to lower sales from Russia.
The palladium price followed the other precious metals higher, to a peak of
$588 in March, before heavy fund sales drove it down to end September at
$199.
Lower Palladium Sales by Russia; Production Falls in South Africa
Palladium supplies will fall by a forecast 12.5 per cent to
7.51 million ounces in 2008. Palladium sales from South Africa will decline
to 2.525 million ounces, reflecting the challenges in the mining sector there
this year. Russian supplies of palladium from primary production are forecast
to slip slightly, to below three million ounces. Most significantly, sales of
palladium from Russian state stocks are expected to fall from 1.49 million
ounces in 2007 to 800,000 oz this year.
Palladium Autocatalyst Demand Rises Again
Vehicle manufacturers are set to purchase a gross 4.58 million
ounces of palladium in 2008, 30,000 oz more than in the previous year.
Declining North American vehicle production will cut 350,000 oz from demand.
However, this will be offset by rising production in China, Russia and South
America and increasing use of palladium in diesel oxidation catalysts on cars
in Europe.
Chinese Palladium Jewellery Demand Likely to Rebound
Net global palladium jewellery demand is forecast to rise by
55,000 oz to 780,000 oz in 2008, reversing two years of decline. A reduction
in recycling of old stock in China and good interest from manufacturers and
retailers in the second half of the year will help boost demand there. Demand
will also rise in Europe and in North America as interest in palladium
jewellery continues to grow.
Higher Investment Demand Through Exchange Traded Funds
Physical investment demand for palladium is expected to rise
from 260,000 oz in 2007 to 470,000 oz this year. Large amounts of metal were
purchased by investors through the two European Exchange Traded Funds in
early 2008 as the palladium price rose yet these investors sold little metal
as the price fell in the third quarter and appear to be investing for the
longer term. These funds are forecast to account for 430,000 oz of demand for
the entire year.
Palladium Set to Trade Between $125 and $300 During the Next Six Months
The palladium price responded to movements in currencies and
in the prices of other precious metals in the first three quarters of 2008.
While the outlook for palladium is positive in some of its applications, a
worsening economic climate and the possibility of a stronger US Dollar could
send palladium to as low as $125 during the next six months. However, should
economic conditions stabilise or improve, palladium's strengthening
fundamentals could see it trade as high as $300 within the same period.
Platinum Interim Review 2008 is Johnson Matthey's latest market survey of
platinum group metals supply and demand. This report, widely regarded as the
world's principal source of information on platinum group metals, is free of
charge. It can be viewed and downloaded as an electronic file or can be
ordered in printed form from Johnson Matthey at
http://www.platinum.matthey.com/publications/pgmreview.html
Johnson Matthey is the world's leading authority on the production,
supply and use of platinum and the other metals of the platinum group. The
company's main activities include the manufacture of autocatalysts, platinum
process catalysts and speciality chemicals and the refining, fabrication and
marketing of platinum group metals.
For further information contact:
David Jollie +44(0)7967-278020
Jeremy Coombes +44(0)7967-278012
Peter Duncan +44(0)7967-278236
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