Platinum, Palladium Seen in Deficit by Johnson Matthey

  • Company expects demand from carmakers to increase this year
  • Platinum supply seen steady, palladium up ‘marginally’

Platinum will remain in a global deficit this year as carmakers and other industrial users boost demand while supplies remain stagnant, according to Johnson Matthey Plc. Palladium consumption will also exceed supply.

Platinum purchases by automakers will climb almost 2 percent, leading to an 861,000-ounce shortage, Johnson Matthey said in a report on Monday. Palladium’s shortfall will total 843,000 ounces. That compares with a deficit last year of 659,000 ounces for platinum and 447,000 ounces for palladium.

Prices of the metals, which are mostly used to curb harmful vehicle emissions, rebounded this year partly as expectations that U.S. interest rates will remain low boosted the appeal of precious metals. The gains will probably extend through 2017 as stricter environmental rules around the world increase usage from the auto industry, a Bloomberg survey of analysts and traders showed.

Johnson Matthey, which makes one in three car autocatalysts, released its outlook for this year as platinum miners to refiners gathered in London for the industry’s annual Platinum Week.

A drop in platinum supply from mines in South Africa, the world’s biggest producer, will be will be broadly offset by higher recycling from the auto and jewelry industries, according to the report. Palladium supply will increase “marginally” as recycled output more than makes up for lower production.

Estimate breakdown:

  • Platinum auto demand will rise to 3.5 million ounces, while other industrial usage is expected to increase almost 10 percent.
  • Global platinum jewelry demand is seen at 2.93 million ounces, aided by more purchases in China.
  • Carmarkers will increase palladium demand to 7.76 million ounces.
(Corrects size of 2015 shortages in second paragraph of May 16 story.)
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