[miningmx.com] – THE platinum market would stage a remarkable reverse in 2012 sliding to a 400,000 ounce deficit by dint of strike-enforced production interruptions and a decline in recycling, said Johnson Matthey, the UK-based platinum consultancy and semi-fabricator.
South African production would be 300,000 oz lower to 4.25 million oz, a 12% year-on-year decline and an 11-year low as junior miners and major platinum firms alike shuttered shafts and mines amid an industry-wide margin squeeze. All in all, South African platinum production would be 605,000 oz lower in 2012.
Globally, platinum supply would fall 10% to 5.84 million oz.
Moreover, there was little prospect of South African platinum supply recovering in 2013 from current levels – a development that is bound to give wings to Lonmin’s hopes that platinum prices would improve its precarious financial position.
On the demand side, gross demand was expected to remain firm at 8.07 million oz in 2012, although suggesting the platinum price gains have been predicated solely on exogenous supply side factors, there will be a 1% softening in the key autocatalysis sector, Johnson Matthey said.
Johnson Matthey had forecast a platinum price trading range of $1,400 to $1,800/oz until the middle of 2013.
Jonthan Butler, publications manager at Johnson Matthey, said the wide trading range was suggestive of uncertainty in the market. The average platinum price was forecast to be $1,625/oz, he said. Platinum is currently trading at $1,557.30/oz.
Earlier this year, precious metals market consultancy GFMS said a massive stockpile of platinum had developed that could cap the price for years. Estimated at 4.5 million oz, inventories could balloon to 5 million oz in a year. “There’s no killer app,’ said Paul Walker at a GFMS presentation.
Commenting in its interim review, Johnson Matthey said of supply in 2013: “[A]s a result of ongoing disruption and possible restructuring of the industry, it is difficult to expect an increase in supplies from South Africa of any great magnitude from the 4.25 million oz forecast this year”.
Commenting on next year’s demand picture it said: “In 2013, gross platinum demand is expected to see modest growth, with steady autocatalyst demand and a recovery in industrial purchasing”.
Butler said of the South African supply side, high fixed costs would be a feature of 2013 as companies absorbed wage increases agreed in the last three months. He declined to comment on the possibility of more labour disruptions. “We can’t make any assumptions on labour,” he said.
