Any rise in commodity investment could see palladium trade at $280/oz in the next six months, but, without this investor interest, palladium could trade as low as $180/oz. Johnson Matthey expects platinum to trade above $950/oz during the same period.

It said in its latest ‘Platinum 2009’ market survey that platinum should derive good support from physical buying in Asia and from its strong longer-term fundamentals.

While demand for platinum from the automotive and industrial sectors remains poor, purchases by China’s jewellery industry and by investors have offset this weakness in 2009.

Global platinum supplies are forecast to rise marginally in 2009 compared with figures for the previous year.

Johnson Matthey expects that supply and demand will be more closely matched in 2009 than in 2008 and that the price of platinum will be much less volatile.
In 2008, the global demand for platinum fell by 5%, to 6,35-million ounces, Johnson Matthey found.

Autocatalyst demand suffered owing to a slowdown in North American and European vehicle production.
Industrial demand was also affected by the growing weakness in the world economy and declined slightly.

However, a fall in the price of platinum revived demand from the jewellery and physical investment sectors in the second half of the year.

Supplies of platinum fell by 9,5%, to 5,97- million ounces last year, mainly as a result of a difficult operating environment in South Africa but, overall, the platinum market was in deficit by 375 000 oz.

Global platinum supplies decreased by 630 000 oz in 2008 to a total of 5,97-million ounces.
Sales of the metal from South Africa fell by 540 000 oz, to 4,53-million ounces, as production was badly hit by a wide range of problems, including interruptions to electricity supply, bad weather, safety closures, smelter shutdowns and shortages of skilled staff.

Russian platinum supplies decreased by 95 000 oz, to 820 000 oz, while sales of the metal from other producing nations climbed marginally.

Gross autocatalyst platinum demand fell by 8,2%, to 3,81-million ounces, last year and remains weak.

European vehicle manufacturers reduced their platinum purchases for use in catalytic converters owing to lower light-duty vehicle production, despite the greater use of platinum- containing particulate filters on diesel cars.

Platinum use in North America also fell, reflecting lower vehicle output and continuing efforts to replace any remaining platinum in petrol catalyst formulations with palladium.

Global jewellery manufacturing volumes were depressed in early 2008 by the high platinum price but recovered later in the year in Japan and China as the price fell.

The amount of old jewellery recycled in Asia was extremely high at the start of the year but decreased sharply as the falling price squeezed recyclers’ profit margins and discouraged individuals from selling second-hand pieces. The annual net demand was thus much stronger than previously expected, falling by only 6,2%, to 1,37-million ounces.

Net global physical investment demand increased by 150%, to 425 000 oz, as Japanese investors responded positively to the falling metal price in the second half of the year.

Palladium
Palladium demand grew by 15 000 oz, to 6,85-million ounces, in 2008, despite the effects of the global economic slowdown.

Gross autocatalyst palladium demand fell in North America owing to a sharp decline in vehicle production but climbed in Europe, China and the rest of the world.

Net jewellery demand and investment demand both increased strongly, as did demand in many industrial sectors.

Total palladium supplies fell by 1,27-million ounces, to 7,31-million ounces, owing to lower primary production and a fall in sales of palladium from Russian State stocks.

The palladium market remained in a surplus of 460 000 oz in 2008.

The total palladium supplies fell by 14,8%, to 7,31-million ounces, in 2008. South African palladium sales fell by 335 000 oz, to 2,43- million ounces, owing to the wide range of problems experienced by its mining industry.

North American supplies of palladium decreased to 910 000 oz as production was cut in the final quarter of the year.

The total Russian supplies declined to 3,66-million ounces; primary production fell and sales of palladium from State stocks were 960 000 oz, over 500 000 oz lower than in the previous year.

Gross autocatalyst palladium demand decreased by 3,6% in 2008, to 4,38-million ounces.

Although North America remains the largest market in terms of palladium con- sumption, purchases of the metal in this region decreased by more than 20%, to 1,35-million ounces, as light-duty vehicle production fell sharply.

In Europe, increasing use of platinum/ palladium catalysts in the diesel sector outweighed the effects of lower vehicle output and drove total palladium demand 30 000 oz higher, to 950 000 oz.

The net demand for palladium from the jewellery industry increased by 19,6%, to 855 000 oz in 2008.

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