JOHANNESBURG (miningweekly.com) - Platinum refiner Johnson Matthey expects the price of platinum to range between $700/oz and $1 400/oz in the next six months, and said on Tuesday that the outlook for the market was more uncertain than it has been for many years.

“The dramatic fall in the platinum price in the third quarter of the year could yet pose significant challenges to the primary producers and make expansion less attractive,” Johnson Matthey said.

Looking at demand for the precious metal, Johnson Matthey said it seemed likely that most major national economies would suffer a recession, or slowdown in growth, and this would impact on industrial demand for the metal. Demand from the autocatalyst sector however, could improve, as it was supported by the European diesel sector. Jewellery demand could recover if prices stabilised, which would mean higher retail sales.

Record prices early in the year, reaching $2 276/oz in March 2008, drove demand lower and end-users controlled metal consumption closely.

In the 'Platinum 2008 Interim Review', Johnson Matthey said that the extreme uncertainty in the global financial markets made it difficult to forecast the severity of the present economic slowdown with any accuracy.

The platinum market was forecast to show a deficit of 240 000 oz in 2008. Platinum supplies were expected to fall 4,28% to 6,28-million ounces, while demand would decrease by 2,3% to 6,52-million ounces.

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The interim review said that platinum supplies in 2008 were likely to fall by 275 000 oz, to 6,28-million ounces.

As for South African production in 2009, “it’s a possibility that production will increase, but only very modestly,” said Johnson Matthey principal analyst market research Alison Cowley, adding that stakeholders should be “cautious in how much extra production we would expect for the next year”.

Electricity supply problems, smelter outages, lack of skilled staff and other challenges would lower South African supply by some 250 000 oz, to 4,78-million ounces in 2008.

Platinum production from Russia was expected to fall to 855 000 oz. Production from Zimbabwe and North America was expected to increase.

Cowley noted that three new mines could be making a contribution to production in the next year. At Ridge Mining’s Blue Ridge operations, mining has started and the company was building a stockpile of ore ahead of the commissioning of its concentrator, which was scheduled for November. The first refined metal was expected in early 2009.

Platinum Australia’s Smokey Hills project began open pit mining in January and it was possible that some platinum group metals could be refined before the end of 2008.

Platmin’s Pilanesberg open pit mine was set to come into production early next year.

The Johnson Matthey interim review was released before the news that Lonmin would be shutting a number of its operations and continuing only with underground operations at its Marikana mines, where production would increase in an attempt to compensate for lost ounces.

The report stated that Lonmin platinum sales in the year to September 2008 were 9% down, compared with the prior financial year.

Maintained output from existing South African producers, as well as adding extra ounces from new operations would be critical, said Johnson Matthey.

Cowley, however, added that the difficult operating environment would likely continue. She said it would be surprising if one did not see projects being deferred or delayed.

Although the rand exchange was “pretty helpful for the industry”, and Cowley said there was “potential for expansion projects”, these would be “nothing like on the scale we would have expected”.

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