Demand for ruthenium is expected to rise by 4,1% to a new peak of 1,34 million ounces in 2007, says Johnson Matthey in its ‘Platinum 2007’ interim report.
This is largely a result of increased purchases for new technology developments by the electronics industry. And demand for rhodium is likely to fall by 3,9% in 2007, as the weight of the metal used in the autocatalyst sector will decline for the first time since 2002. Supplies could also decrease, with lower shipments from Russia, and the rhodium market is likely to be close to a balance, with a deficit of only 4 000 oz.
Palladium demand will return to growth in 2007, rising by 135 000 oz, but the market will remain in surplus, Johnson Matthey marketing and publications GM Jeremy Coombes says, adding that the price of palladium in the next six months is forecast to stay between $320/oz and $420/oz.
“Fund buying could raise the price to $420/oz over the period, particularly if platinum and gold prices rise,” he says.
He adds that fund and investor interest will continue to determine the price, as some investors feel that the metal is currently under- valued, and these investors will not let the price fall below $320/oz in the next six months.
The growth in demand is largely attributed to the rising purchases of palladium by the automotive sector for use in the production of autocatalysts, which serve to lower carbon dioxide emissions from vehicles.
In light-duty diesel autocatalysts, the use of palladium is forecast to increase by over 200 000 oz in 2007, more than double the figure for 2006.
The use of palladium instead of platinum in the petrol-vehicle sector continues to grow, and about three times as much palladium as platinum is now used in petrol cars.
However, Coombes indicates that the replacement of platinum by palladium in the petrol-vehicle sector is approaching its limit, although there is room for growth in the diesel sector.
Coombes says that platinum’s stronger-than-expected fundamentals will continue to support the price, and the weak dollar and the buoyant gold price should help to drive platinum through the $1 500/oz level and trade as high as $1 575/oz.
He adds that, if investment senti- ment were to falter, a softening in the price could occur, such as has been seen in the past few days. However, the strong physical demand from Asia will likely carry and support the price, which will not fall below the $1 350/oz level.
Coombes states that the company initially expected to see a surplus in 2007, but has since adjusted this view.
“We believe there will be a deficit in the market in 2007, and a fall in supply is the main cause of the market deficit.”
The combination of a record increase in demand, of 4%, over the interim period, and a decrease in supply, of 2%, will move the plati- num market back from the previous year’s small surplus to a deficit of 265 000 oz.
Coombes states that continued growth in demand is expected, particularly in the manufacture of autocatalysts, and on the heavy-duty diesel side.