Implats bullish on PGMs

Brendan Ryan | Thu, 18 Feb 2010 17:45

[miningmx.com] -- IMPALA Platinum (Implats) marketing group executive Derek Engelbrecht has predicted deficits in both the platinum and palladium markets during 2010.

Speaking at the Implats interim results presentation for the six months to December on Thursday, he said the platinum market showed a deficit of 245,000 ounces for 2009 which he expected to increase to 345,000oz in 2010.

Engelbrecht also expected the palladium market to swing from a surplus of 305,000oz in 2009 to a deficit of 810,000oz in 2010.

He added he believed the palladium price could double over the next five years. The current palladium price is about $430/oz.

However, Engelbrecht expected the rhodium market to stay in surplus with a forecast oversupply of 79,000oz in 2010, compared with a surplus of 74,000oz in 2009.

Engelbrecht said: “I know I have had egg on my face before from predicting the end of major palladium sales from Russian stocks but if you look at what they have destocked over the past 15 years, the end has to be in sight.”

Engelbrecht highlighted the impact of the newly-launched platinum and palladium exchange traded funds (ETFs) in the United States.

“So far, those ETFs have taken up 265,000oz of platinum and 450,000oz of palladium. It has taken the US funds just one month to get to the levels of off take that the Europeans took a year to reach. God bless America,” Engelbrecht quipped.

He was also upbeat on Chinese demand for platinum, for use in both jewellery manufacture and in the autocatalyst required to clean up vehicle engine emissions.

Engelbrecht described car sales in China – which overtook the US last year to become the world’s largest car market - as “astonishing”.

He said China’s 2010 car sales could reach between 15 million and 16 million vehicles, which would match the US market during its best years.

Engelbrecht also pointed to rising car sales in India, which went over 2 million in 2009. This made India a bigger car market than all the European countries, except Germany.

He said jewellery demand for platinum on the Shanghai Gold Exchange had held up well so far this year, despite the platinum price averaging around $1,500/oz compared with $1,000/oz at the start of 2009.

“The platinum price is now back to the levels that ruled ahead of the Eskom crisis, but clearly there’s still an appetite for platinum jewellery at price levels of around $1,500/oz.”