Norilsk Sees Platinum Group Metals Demand Rising 5% Next Year

OAO GMK Norilsk Nickel, the world’s biggest producer of nickel and palladium, predicts demand for platinum group metals will rise as much as 5 percent next year, exceeding increases of as much as 3 percent for copper and nickel, as the global economy avoids a slump as severe as that seen in 2008.

The company expects platinum group metals prices will rise next year and doesn’t see “fundamental reasons” for copper and nickel prices to fall, Anton Berlin, head of Norilsk’s analysis and market research department, said today in a telephone interview from Moscow. He declined to give specific forecasts. Norilsk’s production will be little changed next year, he said.

“The increase in production should be expected after year 2020,” Berlin said. “We don’t have a possibility to increase output quickly. There is no excessive capacity to produce more palladium even if the price jumps.”

Berlin said demand for metals will increase next year as the worldwide economic situation is “very different” from what was seen in 2008, after the collapse of the U.S. housing market and Lehman Brothers Holdings Inc. spurred a global credit crunch and economic slump.

“We don’t expect a crisis,” he said.

The company has said it produces about 45 percent of the world’s palladium, a metal used in catalytic converters for vehicles. Norilsk Nickel says it produces about 20 percent of the world’s nickel, and accounts for 11 percent of platinum output and 2 percent of copper production.

Berlin says he expects Russia, the world’s biggest supplier of palladium, to cut back on exports of the metal next year. The size of Russia’s palladium stockpiles is a state secret.

“Palladium prices will inevitably increase” next year, he said.

To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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