JOHANNESBURG (miningweekly.com) – The global platinum market experienced a deficit of 375 000 oz in 2012, owing to a steep decline in output from South Africa, platinum group metals authority Johnson Matthey’s ‘Platinum 2013’ report has revealed.
Published on Monday, the report found that primary platinum supply fell by 13% to 5.64-million ounces, its lowest level in twelve years.
Total platinum demand for the year was down by 0.6% to 8.05-million ounces, while recycled platinum came to 2.03-million ounces, marginally less than in 2011.
Platinum recycling from end-of-life autocatalysts fell in Europe and North America, while the price of platinum averaged $1 552/oz in 2012, $169 lower than in 2011, prompting collectors to hoard stock, while awaiting better price opportunities.
However, the decline in recovery from this source was partly offset by greater recycling of platinum jewellery scrap in China.
Platinum shipments by South African producers slumped by 16% to 4.1-million ounces during the year under review, with at least 750 000 oz of production lost to strikes, safety stoppages and the closure of some marginal mining operations.
Meanwhile, gross demand for platinum in autocatalysts rose by 1.7% to 3.24-million ounces. Weak European demand for platinum, dragged down by depressed light vehicle output and a lower market share for diesel vehicles, was offset by higher demand in Asia and North America and by increasing demand for platinum autocatalysts for nonroad diesel engines.
Gross global jewellery demand for platinum improved by 12% to 2.78-million ounces in 2012, boosted by the expansion of the retail jewellery distribution network in China.
Industrial demand for platinum fell by 21% to 1.57-million ounces during the year, affected by a slowing of expansion in the glass industry, reduced production of hard disk drives in the electrical industry and the drawdown of inventory in both sectors. Chemical demand was slightly lower than in 2011, while demand for platinum in other applications was stable.
Johnson Matthey expected primary platinum supply in 2013 to improve somewhat, with broadly the same level of sales from South Africa as in 2012 and slightly higher shipments from other regions.
On the other hand, gross demand for autocatalysts was unlikely to grow, while jewellery demand could decline somewhat.
Demand from industry, particularly the glass sector, was expected to rebound from the low 2012 level, while the secondary recovery of platinum from autocatalyst scrap was anticipated to grow. This would leave automotive, industrial and jewellery demand more or less matched by supply.
However, the firm pointed out that, should investment demand repeat last year’s pattern of net growth, the market for platinum could be in a slight deficit in 2013.
The study also found that the palladium market moved into a deficit of 1.07-million ounces in 2012, from a surplus of 1.19-million ounces the year before. This was attributable to lower primary and secondary supplies, record demand for palladium autocatalysts from the auto industry and a significant shift in investment demand from heavily negative in 2011 to strongly positive in 2012.
Palladium supply fell by 11% in 2012 to 6.55-million ounces, the lowest since 2002. Russian newly mined supply declined by 3% to 2.63-million ounces, while sales from State stocks fell by two-thirds to 250 000 oz, as palladium reserves neared depletion.
Adding to supply pressures were strikes and other stoppages in South Africa, which impacted supply, leading to a drop of 9% to 2.33-million ounces.
Gross demand for palladium rose by 16% to 9.9-million ounces in 2012. Purchases for autocatalyst manufacturing increased by 7.5% to a new high of 6.62-million ounces, propelled by recovering car output in Japan following the natural disasters of 2011.
Meanwhile, Johnson Matthey indicated that palladium supplies were likely to fall again in 2013, as Russian stock sales diminished further and mine output from Russia and South Africa struggled to grow.
It noted that, although nonautomotive industrial demand may be stable at best, autocatalyst demand was expected to continue increasing, probably to a greater extent in absolute terms than growth in recycling from autocatalyst, electrical and jewellery scrap.
“This is a recipe for an undersupplied market, an outlook which should maintain positive interest in palladium by subscribers to exchange-traded funds and other investment vehicles, with potential upward pressure on the palladium price as a result,” the research firm said.