Platinum is leaving its low-price past behind it and the palladium deficit is deepening, the Thomson Reuters GFMS platinum report states.

The team forecasts a $1 005/oz average platinum price in 2016 and a $595/oz palladium price, with GFMS precious metals mining manager William Tankard expecting higher platinum and palladium pricing trajectories.

January’s price lows are seen as reflecting the bottom of this cycle.

Longer-term, the damage done to the mining industry is expected to lower production volumes at a time when industrial demand will be gradually firming up.

“This will drive platinum back to a position of deficit, and make palladium’s deficit deeper in 2016 and beyond,” Tankard adds in a release to Creamer Media’s Mining Weekly.

The survey found that global platinum mine output recovered 27% to 6.16-million ounces in 2015, a year in which palladium’s physical deficit stayed at 0.87-million ounces.

Autocatalyst scrap declined by 14%, with lower steel and platinum-group-metal (PGM) prices impeding the flow of scrap down the supply chain.

Platinum consumption in autocatalyst applications rose by 2% to three-million ounces, with the off-road sector recording a 24% increase off a low base.

Light-duty diesel saw a 5% uptick in platinum demand and, in Europe, firmer vehicle production and increased platinum loadings both contributed to higher platinum demand as original-equipment manufacturers began to position after-treatment solutions that could stand the test of time in real driving conditions.

Platinum jewellery fabrication fell by 4% to 2.46-million ounces in 2015, with China accounting for the bulk of this loss.

Although investment demand for exchange-traded funds was weak over the year, when there was a net redemption of 0.26-million ounces, platinum bullion for retail investment had a stellar year, rising threefold-plus to an all-time high of 0.47-million ounces on Japanese growth.

Palladium in 2015

Last year’s mined palladium output grew 9% to 6.71-million ounces, while autocatalyst scrap supply retreated 11% to 1.60-million ounces.

Palladium demand in autocatalyst applications rose 4% to 6.89-million ounces, with all regions outside of Japan recording healthy gains.

Demand for palladium in industrial applications fell 7% to 2.17-million ounces, a ten-year low.

There was a 7% drop in petroleum refining demand, a 6% drop in dental sector demand and a double-digit percentage demand drop in electronics.

Jewellery demand fell for the seventh consecutive year to 0.35-million ounces, a 37% decline, the lowest level since 2002, with offtake plummeting 70% in China on fabricators exiting the sector.

Rhodium in 2015

The relative lack of rhodium buying interest persisted, with much of the market surplus absorbed by dealers and banks rather than investors, which resulted in the metal’s lacklustre pricing.