[miningmx.com] – ABOVE ground stocks of platinum, pin-pointed as a key factor in suppressing the price of the metal since 2011, would decline again in 2015 as the market remained in a deficit, said the World Platinum Investment Council (WIPC).
Commenting in its year-end report, the WPIC said today that global output of platinum would also increase as primary production from South Africa recovered from last year’s strike which cost 1.3 million ounces in output.
“Today’s 2015 forecast also indicates that even with a recovery in supply, the market will remain in deficit as major demand segments continue to grow,” said Paul Wilson, CEO of the WIPC. The WIPC was established by South Africa’s platinum sector in order to compile supply and demand data and grow investment demand.
The key findings of the WIPC’s forecast for this year is that the supply deficit would be 235,000 oz. This would be lower than the 700,000 oz deficit of 2014 but enough to cut stocks 8% to 2.54 million oz. Stocks fell 20% in 2014 to 2.77 million oz, it said.
Global refined production will expand during 2015, however South African output is unlikely to exceed 2013 levels, said Wilson. Total global demand for platinum is predicted to increase in 2015, led by growth in industrial demand of 9%, he added.
Despite the decline in inventories, the platinum price has failed to respond and has fallen 22.6% on a rolling 12-month basis – a development that Wilson said in an interview was confounding as “people were following the market” down. The WIPC does not make price forecasts.
However, Wilson said there were reasons to be cheerful about the platinum sector.
Although there was an outflow in investment demand in the second half of the calendar year in 2014, the right investors were now involved in the market. “ETF [Exchange Traded Funds] holders are taking a longer view of the market,” he said.
Asked to comment on prospects for South African production, head of the WPIC’s research, Trevor Raymond, said a decline in productivity and lower capital expenditure was “changing the nature” of the industry.
Total platinum supply in 2014, which includes metal that was recycled, was 8% lower at 7.2 million oz. Recycling, which was marginally higher in 2014 year-on-year, would stabilise in future years, said Raymond.
“2014 was a growth year for all major segments of demand (automotive, jewellery and industrial), which grew by 200 koz in total,” the WIPC said. However, this growth was more than offset by a fall in investment demand as the exceptional growth produced by the launch of a new South African ETF in 2013 would not be repeated.
Quantitative easing in Europe would make exports more competitive and lift the cost of buying platinum, but the net effect was it would stimulate the region’s economy, he said.
