Johnson Matthey: Platinum 2013
THE PLATINUM MARKET WAS IN DEFICIT BY 375,000 OUNCES IN 2012 AS SUPPLY FELL TO
A 12-YEAR LOW
IF INVESTMENT DEMAND REMAINS POSITIVE, PLATINUM MAY BE SLIGHTLY IN DEFICIT IN
LONDON -- May 13, 2013
The platinum market was in deficit by 375,000 oz in 2012 due to a steep
decline in output from South Africa, according to Johnson Matthey in ‘Platinum
2013’, published today. Primary supply of platinum fell by 13% to 5.64 million
ounces, the lowest for 12 years. Total demand for platinum in 2012 was down by
0.6% to 8.05 million ounces. Recycling of platinum came to 2.03 million
ounces, marginally less than in 2011.
Platinum shipments by South African producers fell by 16% to 4.10 million
ounces in 2012. At least 750,000 oz of production were lost to legal and
illegal strikes, safety stoppages and closure of some marginal mining
operations. Changes to supply from other regions were insignificant by
Gross demand for platinum in autocatalysts rose by 1.7% to 3.24 million
ounces. Weak European demand for platinum, due to depressed light vehicle
output and a lower market share for diesel vehicles, was more than offset by
higher demand in Asia and North America and by increasing demand for platinum
autocatalysts for non-road diesel engines.
Gross world jewellery demand for platinum improved by 12% in 2012 to 2.78
million ounces. It was boosted by expansion of the retail jewellery
distribution network in China, allied to a degree of increase in
manufacturers’ finished jewellery stocks. Investment demand for platinum was
steady at 455,000 oz, with strong investor interest in North America and a
rise in the minting of platinum coins.
Industrial demand for platinum in 2012 fell by 21% to 1.57 million ounces. It
was affected by a slowing of expansion in the glass industry, reduced
production of hard disk drives in the electrical industry and the drawdown of
inventory in both sectors. Chemical demand was slightly lower than in 2011,
while demand for platinum in other applications was stable.
Recycling of platinum from end-of-life autocatalysts fell in Europe and North
America. The price of platinum averaged $1,552 in 2012, $169 lower than in
2011, causing collectors of spent autocatalysts to hoard stock, awaiting
better price opportunities. The decline in recovery from this source was
partly offset by greater recycling of platinum jewellery scrap in China.
Johnson Matthey expects primary supply of platinum in 2013 to be a little
higher than last year, with broadly the same level of sales from South Africa
as in 2012 and slightly higher shipments from other regions. Gross demand for
autocatalysts is unlikely to grow and jewellery demand may well decline
slightly. Demand from industry, notably the glass sector, is expected to
rebound from the low 2012 level, while secondary recovery of platinum from
autocatalyst scrap should grow. This will leave auto, industrial and jewellery
demand more or less matched by supply. If investment demand repeats last
year’s pattern of net growth, then the market for platinum may be in a slight
deficit in 2013.
LOWER SUPPLY, STRONG AUTO AND INVESTMENT DEMAND CREATED A LARGE PALLADIUM
DEFICIT IN 2012.
THE PALLADIUM MARKET IS EXPECTED TO REMAIN IN DEFICIT IN 2013.
The palladium market moved into a deficit of 1.07 million ounces in 2012 from
a surplus of 1.19 million ounces in 2011. This was the result of lower primary
and secondary supplies, record demand for palladium autocatalysts from the
auto industry and a substantial swing in investment demand from heavily
negative in 2011 to strongly positive in 2012.
Palladium supply fell by 11% in 2012 to 6.55 million ounces, the lowest since
2002. Russian newly-mined supply declined by 3% to 2.63 million ounces, while
sales from state stocks fell by two-thirds to 250,000 oz as palladium reserves
neared depletion. South African palladium supply, affected by strikes and
other stoppages, fell by 9% to 2.33 million ounces.
Gross demand for palladium rose by 16% to 9.90 million ounces in 2012.
Purchases for autocatalyst manufacturing increased by 7.5% to a new high of
6.62 million ounces, propelled by recovering car output in Japan after the
natural disasters of 2011, further growth in China, and a boom in new
registrations in North America as consumer confidence and economic activity
continued to improve.
Industrial demand for palladium weakened by 4% to 2.37 million ounces in 2012.
The metal was less intensively used for chip capacitors, its main electrical
application, due to thrifting and to competition from base metal alternatives.
Demand for palladium process catalysts improved with the expansion of capacity
in Asia for making chemical intermediates for polyesters and plastics.
Lower production in China was the cause of a 12% decline to 445,000 oz in
gross world demand for palladium in jewellery. Anaemic consumer demand for
palladium jewellery in China has resulted in fewer manufacturers and retailers
producing it or carrying stock. Demand for palladium was steady in most other
regions and slightly higher in Europe, supported by its use in wedding rings
Net physical investment in palladium in 2012 changed by over one million
ounces. It switched from a negative 565,000 oz in 2011 to a positive 470,000
oz last year. Flows of palladium into exchange traded funds (ETFs) were strong
in the first half of the year. The launch of a new investment trust in the USA
in December 2012 added significantly to demand.
Supplies of palladium are likely to fall again in 2013 as Russian stock sales
diminish further and mine output from Russia and South Africa struggles to
grow. Although non-automotive industrial demand may only be stable at best,
autocatalyst demand will continue to increase, probably to a greater extent in
absolute terms than growth in recycling from autocatalyst, electrical and
jewellery scrap. This is a recipe for an undersupplied market, an outlook
which should maintain positive interest in palladium by subscribers to ETFs
and other investment vehicles, with potential upward pressure on the palladium
price as a result.
Johnson Matthey will give a six-month platinum and palladium price forecast at
its Platinum 2013 presentation in London on 13^th May 2013. The forecasts and
the full text of Platinum 2013 will be available at www.platinum.matthey.com.
Platinum 2013 is Johnson Matthey’s latest free survey of the platinum group
metals market. Johnson Matthey is the world’s leading authority on production,
supply and use of the platinum group metals.
Please use our Twitter hashtag: #Platinum2013
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