Platinum price may hit $1 575/oz - Johnson Matthey

13th November 2007 By: Christy van der Merwe

Platinum could trade as high as $1 575/oz during the next six months, precious metals refiner Johnson Matthey forecast on Tuesday, when it released its 'Platinum 2007' interim review.

The company expected the market into 2008 to remain "pretty tight", and the fundamentals, which have been a stimulus for the price would continue.

"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 level and trade as high as $1 575/oz," Johnson Matthey GM marketing and publications Jeremy Coombes said in Johannesburg.

He added that if investment sentiment 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, would likely carry and support the price, which would not fall below the $1 350/oz-level.

Coombes stated that the company initially expected to see a surplus in 2007, but had 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."

Interruptions to supply from South Africa have contributed to the tightness in the platinum market, and these were largely as a result of safety related shutdowns, industrial strike action, and processing problems, such as the closure of a smelter by Lonmin for rebuild.

The combination of a record increase in demand of 4% over the interim period, and a decrease in supply of 2%, would move the platinum market back from the previous year's small surplus, to a deficit of 265 000 oz.

Coombes stated that continued growth in demand was expected, particularly in the manufacture of autocatalysts, and on the heavy duty diesel side.

He added that "industrial applications had hardly been affected by high prices, which just goes to emphasise the value of platinum in modern technology".