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Johnson Matthey Launches Platinum 2011 Interim Review

November 15, 2011

LONDON, November 15, 2011 /PRNewswire/ –

– Platinum Market Expected to be in Modest Surplus in 2011

Gross demand for platinum is forecast to rise to 8.08 million ounces in
2011, close to pre-recession levels, according to Johnson Matthey in
“PLATINUM 2011 Interim Review”, released today. Continued strong demand will
be more than matched by a rise in supplies and higher levels of recycling.
Overall, the platinum market is expected to end the year in a small surplus
of 195,000 oz.

GLOBAL SUPPLIES OF PLATINUM ARE FORECAST TO INCREASE IN 2011

Supplies of platinum are expected to increase by 6% to 6.4 million
ounces this year, with most of the growth coming from countries other than
South Africa. Although shipments from South Africa will rise modestly to
4.78 million ounces, underlying production is expected to weaken. Additional
supplies are predicted to come from North America as producers recover to
full levels of output following earlier strikes and shutdowns. Supplies from
Zimbabwe will also grow as new capacity comes on-stream. Russian supplies
are expected to be flat at 825,000 oz.

GROSS PLATINUM DEMAND TO BE CLOSE TO PRE-RECESSION HIGHS

Gross demand for platinum is forecast to rise by 2% to 8.08 million
ounces in 2011. Robust demand for platinum in autocatalysts and growth in
demand in industrial applications such as glass and petroleum refining
should drive purchasing to levels not seen since 2007, before the global
economic crisis.

PLATINUM DEMAND IN AUTOCATALYSTS WILL CONTINUE TO GROW

Demand for platinum in autocatalysts is set to increase by 3% to 3.16
million ounces in 2011, driven mostly by higher production of heavy duty
diesel vehicles in Europe and North America. Disruption caused by the
Japanese earthquake in March 2011 affected purchasing of platinum by
domestic manufacturers in Japan and in transplants elsewhere. In Europe,
despite growth in light duty vehicle production, platinum demand is expected
to weaken slightly to 1.48 million ounces as further substitution of
platinum by palladium takes place.

INDUSTRIAL DEMAND SET TO REACH A NEW RECORD

Purchasing of platinum for industrial applications is forecast to reach
a new record high of 1.96 million ounces. In the glass sector, demand will
rise by 13% to 435,000 oz as platinum alloy melting tanks are installed for
LCD glass manufacturing. Construction of new refining capacity will lift
platinum demand in the petroleum industry by 24% to 210,000 oz. Chemical and
electrical demand are also predicted to be strong.

PURCHASING OF PLATINUM BY THE JEWELLERY SECTOR WILL GROW MODESTLY

Gross demand for platinum in the jewellery sector is forecast to be
marginally higher than in 2010 at 2.47 million ounces. In China, we predict
that gross platinum jewellery demand will rise by 2% to 1.69 million ounces.
In North America and Japan, demand for platinum will be robust. We expect
demand to soften in Europe due to higher prices and a move towards lower
weights of individual jewellery pieces.

PHYSICAL INVESTMENT DEMAND TO REMAIN POSITIVE

Identifiable net physical investment demand for platinum is expected to
decline year-on-year, although demand will remain positive at 495,000 oz
with healthy levels of Japanese investment bar purchasing and investment in
platinum exchange traded funds (ETFs).

SOLID PLATINUM DEMAND OUTLOOK DESPITE SOME DOWNSIDE RISKS

The world economy looks set for a period of slower growth in 2012, with
consequently lower consumption and potentially lower demand for platinum in
industrial applications. Despite the downside risks, technology changes in
light duty European autocatalysts and a return to full production levels in
Japan will lead to higher autocatalyst demand. In addition, if the current
gold price premium to platinum is maintained, it may spur further increases
in platinum demand by jewellery manufacturers. With supplies expected to
remain largely flat, we predict the market will remain in surplus again in
2012 but not by a significant amount. Overall, with a generally negative
economic outlook but firm demand, Johnson Matthey forecasts platinum will
trade on average at $1,650 per ounce in the next six months and could trade
as high as $1,800. Physical buying is likely to put a floor under the price
at $1,450.

PALLADIUM MARKET EXPECTED TO BE IN SURPLUS IN 2011 DUE TO RUSSIAN STATE
STOCK SHIPMENTS

The palladium market is forecast to be in surplus by 725,000 oz in 2011,
but only because of another year of sales from Russian state stocks. Without
shipments of state stocks this year, the palladium market would essentially
be in balance with growth in newly mined supplies and rising autocatalyst
and industrial demand, but softer investment and jewellery demand.

SUPPLIES OF PALLADIUM EXPECTED TO RISE IN 2011

Supplies of newly refined palladium are expected to increase by 5% to
6.67 million ounces in 2011. These supplies will be supplemented by sales
from Russian state stocks of 750,000 oz, bringing total supplies to 7.42
million ounces, a similar level to those in 2010.

GROSS AUTOCATALYST DEMAND FOR PALLADIUM TO RISE TO RECORD LEVELS

Growth in vehicle production in Europe and North America in the first
half of the year is expected to drive palladium demand in emissions control
to historic highs of 5.92 million ounces in 2011, a 6% increase compared
with 2010. More stringent emissions standards which came into force this
year have resulted in higher demand for palladium in gasoline autocatalysts,
despite a slower rate of growth in automotive production in China

INDUSTRIAL DEMAND FOR PALLADIUM TO REACH A SIX-YEAR HIGH

Industrial demand for palladium is forecast to rise by 7% to reach
pre-recession levels of 2.65 million ounces. Demand in the electrical sector
is set to remain strong as sales of new computer equipment stimulate the
manufacture of palladium-containing components. Demand for palladium process
catalysts in the chemical industry should also rise, driven by downstream
demand for packaging and textiles, particularly in Asia.

DEMAND FOR PALLADIUM JEWELLERY IS SET TO FALL

Gross demand for palladium jewellery is set to fall by 8% this year to
545,000 oz. Higher prices and weaker consumer sales have led some
manufacturers to stop producing palladium jewellery in China. Palladium
demand is expected to remain robust in Europe where it has a niche in the
men’s wedding band sector.

PALLADIUM INVESTMENT DEMAND WILL BE NEGATIVE THIS YEAR

Investor sentiment has been less enthusiastic for palladium this year,
with net liquidation in the ETF investment market in the year to date. Net
investment demand for 2011 is forecast to be negative by 215,000 oz.

PALLADIUM FORECAST TO TRADE ON AVERAGE AT $650 IN THE NEXT SIX MONTHS

The palladium market is forecast to move into fundamental deficit in
2012. Supplies of palladium are forecast to be tighter overall in 2012, due
to lower sales of Russian state stocks partly offset by slightly higher
shipments from South Africa. With the investment and jewellery sectors
representing a much smaller share of palladium demand than pre-2011, the
palladium market will be more industrially-driven next year. Overall demand
in the autocatalyst and industrial markets is expected to rise, although the
possibility remains that lower consumer spending could have knock-on effects
on purchasing in some regions. These positive supply-demand fundamentals
should be supportive of the palladium price, which Johnson Matthey forecasts
will trade between $500 and $800 per ounce, and on average at $650, in the
next six months.

Platinum 2011 Interim Review is Johnson Matthey’s latest survey of the
platinum group metals market. This free report is widely regarded as the
world’s principal source of information on platinum group metals. It can be
viewed and downloaded as an electronic file or can be ordered in printed
form from Johnson Matthey at:

http://www.platinum.matthey.com/publications/pgmreview.html

Johnson Matthey is the world’s leading authority on the production,
supply and use of platinum and the platinum group metals. The company’s main
activities include the manufacture of autocatalysts, platinum process
catalysts and speciality chemicals and the refining, fabrication and
marketing of platinum group metals.

For further information contact:

        Mark Bedford +44-(0)7967-278231
        Jonathan Butler +44-(0)7967-278024
        Jeremy Coombes +44-(0)7967-278012
        Peter Duncan +44-(0)7967-278236

SOURCE Johnson Matthey


Source: PR Newswire