JOHANNESBURG (miningweekly.com) – Fundamental analysis of the global platinum market for the next six-year period to 2021 supports a bullish price forecast for the metal, a World Platinum Investment Council- (WPIC-) commissioned report by Glaux Metal, the trading name for the independent research of analyst Dr David Jollie, predicts.
The report also suggested that there were numerous factors within the platinum market pointing towards potential upside in demand and greater downside in supply.
It forecast an average deficit of 250 000 oz/y for six-year period to 2021.
Jollie highlighted that automotive demand would remain robust with, for example, demand for platinum from the global truck market potentially doubling over the next five years.
Higher loadings necessary to meet stricter emissions standards would also increase light-duty demand, with some expected loss of diesel car market share.
Global jewellery demand was, meanwhile, predicted to grow by 1% a year over the forecast period, buoyed by growth in the Indian market, despite little growth forecast for the Chinese market.
Delivering a cautious forecast for investment demand growth, the report outlined that additional demand would be dependent on an increase in the availability of new products.
Such developments could drive “several hundred thousand ounces of additional demand” to 2021.
On the supply side, the report detailed that it was unlikely that primary supplies of platinum would rise above 2015 levels before 2021, with the potential for downside production risk higher than upside potential.
The report also flagged that the threat of further capital expenditure cutbacks by the major producers and corresponding falls in mine output, remained acute if the price of platinum remained weak for an extended period of time.
“My analysis of the fundamentals of the global platinum market supports a bullish price forecast for the metal over the next six-year period.
“Recycling will increase but primary supply remains constrained, while the demand side of the fundamental equation should be stronger over the period than many might initially estimate,” said Jollie.
WPIC research director Trevor Raymond added that the report also highlighted the impact that the WPIC’s market development pipeline could have, supporting demand growth for platinum in the coming years.
“We are now licensed to extend the global reach of platinum bullion coin custodial certificates and our recent Singapore announcement on broader market development in Asia, provides a clear indication of our intentions,” he noted.