Platinum to Stabilize at ‘Comfortable’ $1,800, Anglo Says
Platinum prices will stabilize at current levels as increasing output and slowing jewelry demand offset brisk industrial use and investment, according to Anglo Platinum Ltd., the world’s largest producer of the metal.
“Growth in demand will be matched by the growth in supply, which is a positive situation and healthy when they happen,” Sandy Wood, the head of the commercial unit, said in an interview in Tokyo yesterday. Anglo American Plc. controls the Johannesburg-based company.
Platinum, used to make jewelry and pollution-control devices for cars, has risen 19 percent in the past year after reaching a record $2,301.50 an ounce in 2008. Imports of the metal into China, the biggest auto market, gained 40 percent in 2010, according to the customs agency, as vehicle sales climbed.
Platinum will stabilize at a “comfortable” $1,800 an ounce, Wood said. Morgan Stanley forecast Feb. 20 that platinum will average at $1,748 in 2011 and $1,924 in 2012.
Anglo Platinum said on Feb. 7 its output of the metal will increase by 100,000 ounces to 2.6 million ounces this year. Demand growth has come from use in liquid-crystal displays, storage disks and fuel cells, while demand from trading, exchange-traded funds and funds has been steady, Wood said.
Impala Platinum Holdings Ltd., the world’s second-largest platinum producer, said on Feb. 17 supply may exceed demand by about 20,000 ounces in 2011. Immediate-delivery platinum gained 0.6 percent to $1,794.35 at 2:36 p.m. in Tokyo.
Palladium Replacement
Palladium, also used in pollution control devices in vehicles, will trade between $800 and $850 an ounce, Wood said.
“We are seeing growing requirement for palladium” to replace platinum in the auto-catalyst sector and increasing investment demand, Wood said. Supplies from stockpiles in Russia, the world’s top producer, “may not be as big as in the past,” he said.
Anglo Platinum produced 1.4 million ounces of palladium in 2010. OAO GMK Norilsk Nickel, which accounts 50 percent of world palladium output, produced 2.9 million ounces last year.
Platinum and palladium shortages are possible in the second half of this year, according to Goldman Sachs Group Inc. The shortages may result in price rallies similar to the 40 percent jump in platinum during South Africa’s electricity power cutbacks in 2008, Goldman analyst Eugene King wrote in a report on Feb. 14. Economic growth in the U.S. will tighten balances for both platinum and palladium, leading prices “substantially higher than current levels,” King wrote.
Global palladium demand may outstrip supply by about 560,000 ounces this year, Impala Platinum said. The metal advanced 0.9 percent to $785.50 after touching $862.25 on Feb. 21, the highest level since 2001. It has climbed 86 percent in the past year.
Chinese Demand
Palladium accounts for 90 percent to 95 percent of precious metals used in gasoline catalysts and platinum is used for about 75 percent in diesel devices, according to Johnson Matthey, which produces a third of the world’s auto-catalysts.
China’s vehicle sales will grow 10 percent to 15 percent this year after jumping 32 percent to 18.06 million vehicles in 2010, the China Association of Automobile Manufacturers forecast.
Asked if unrest in North Africa and the Middle East affects demand, Wood said: “If there’s any instability in supplying energy, it may affect the recovery of the world economy.”
Oil surged to the highest in almost two and half years in London as Libya’s violent uprising cut supplies from Africa’s third-biggest producer. Libya is the latest nation to be rocked by protests ignited by the ouster of Tunisia’s president last month and fanned by the Feb. 11 fall of Egyptian President Hosni Mubarak.
“If oil comes in to spoil the party, then that is a concern for me,” Wood said. “Obviously political unrest like that affects confidence. Confidence in the world recovery will be dampened.”
To contact the reporters on this story: Jae Hur in Tokyo at jhur1@bloomberg.net; Ichiro Suzuki in Tokyo at isuzuki@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
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