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MKT&IND REPORTS |
 Gross demand for platinum is forecast to rise by 2% on the year to 8.08 million ounces in 2011, according to the Platinum 2011 preliminary results report released by the precious metals expert division of the U.K.’s Johnson Matthey.
Continued strong demand will be more than matched by a rise in supplies and higher levels of recycling.
Robust demand for platinum in autocatalysts and growth in demand in industrial applications such as glass and petroleum refining should drive purchasing to levels not seen since 2007, before the global economic crisis.
Demand for platinum in autocatalysts is set to increase by 3% to 3.16 million ounces in 2011, driven mostly by higher production of heavy duty diesel vehicles in Europe and North America. Disruption caused by the Japanese earthquake in March 2011 affected purchasing of platinum by domestic manufacturers in Japan and in transplants elsewhere. In Europe, despite growth in light duty vehicle production, platinum demand is expected to weaken slightly to 1.48 million ounces as further substitution of platinum by palladium takes place.
Overall, the platinum market is expected to end the year in a small surplus of 195,000 ounces.
Supplies of platinum are expected to increase by 6% on the year to 6.4 million ounces in 2011, with most of the growth coming from countries other than South Africa.
Although shipments from South Africa will rise modestly to 4.78 million ounces, underlying production is expected to weaken. Additional supplies are predicted to come from North America as producers recover to full levels of output following earlier strikes and shutdowns. Supplies from Zimbabwe will also grow as new capacity comes on-stream. Russian supplies are expected to be flat at 825,000 ounces.
Purchasing of platinum for industrial applications is forecast to reach a new record high of 1.96 million ounces. In the glass sector, demand will rise by 13% to 435,000 ounces as platinum alloy melting tanks are installed for LCD glass manufacturing.
Construction of new refining capacity will lift platinum demand in the petroleum industry by 24% to 210,000 ounces. Chemical and electrical demand are also predicted to be strong.
Gross demand for platinum in the jewelry sector is forecast to be marginally higher than in 2010 at 2.47 million ounces.
In China, we predict that gross platinum jewelry demand will rise by 2% to 1.69 million ounces. In North America and Japan, demand for platinum will be robust. Johnson Matthey expects demand to soften in Europe due to higher prices and a move towards lower weights of individual jewelry pieces.
Identifiable net physical investment demand for platinum is expected to decline year-on-year, although demand will remain positive at 495,000 ounces with healthy levels of Japanese investment bar purchasing and investment in platinum exchange traded funds (ETFs).
Overall, with a generally negative economic outlook but firm demand, Johnson Matthey forecasts platinum will trade on average at $1,650 per ounce in the next six months and could trade as high as $1,800. Physical buying is likely to put a floor under the price at $1,450.
The palladium market is forecast to be in surplus by 725,000 ounces in 2011, but only because of another year of sales from Russian state stocks. Without shipments of state stocks this year, the palladium market would essentially be in balance with growth in newly mined supplies and rising autocatalyst and industrial demand, but softer investment and jewelry demand.
Supplies of newly refined palladium are expected to increase by 5% to 6.67 million ounces in 2011. These supplies will be supplemented by sales from Russian state stocks of 750,000 ounces, bringing total supplies to 7.42 million ounces, a similar level to those in 2010.
Growth in vehicle production in Europe and North America in the first half of the year is expected to drive palladium demand in emissions control to historic highs of 5.92 million ounces in 2011, a 6% increase compared with 2010.
Industrial demand for palladium is forecast to rise by 7% to reach pre-recession levels of 2.65 million ounces. Demand for palladium process catalysts in the chemical industry should also rise, driven by downstream demand for packaging and textiles, particularly in Asia.
Gross demand for palladium jewelry is set to fall by 8% this year to 545,000 ounces. Higher prices and weaker consumer sales have led some manufacturers to stop producing palladium jewelry in China. Palladium demand is expected to remain robust in Europe where it has a niche in the men’s wedding band sector.
The palladium market is forecast to move into fundamental deficit in 2012. Supplies of palladium are forecast to be tighter overall in 2012, due to lower sales of Russian state stocks partly offset by slightly higher shipments from South Africa.
With the investment and jewelry sectors representing a much smaller share of palladium demand than pre-2011, the palladium market will be more industrially-driven next year. Overall demand in the autocatalyst and industrial markets is expected to rise, although the possibility remains that lower consumer spending could have knock-on effects on purchasing in some regions. These positive supply–demand fundamentals should be supportive of the palladium price, which Johnson Matthey forecasts will trade between $500 and $800 per ounce, and on average at $650, in the next six months.
21.11.2011 19:45
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