[miningmx.com] – A THIRD consecutive platinum deficit was on the cards in 2013, said Johnson Matthey in its interim review today. The UK research house and autocatalyst manufacturer also said the platinum price would average $1,465/oz.
A major factor informing its research was static supply from South Africa by dint of shaft closures – some 250,000 ounces less platinum would be produced by Anglo American Platinum (Amplats) – while the prospect of further disruptions could not be discounted.
“Even without further disruptions we don’t think an early return to growth in platinum output is likely,” said Jeremy Coombes, GM of marketing and publications for Johnson Matthey.
The outcome was supply of 5.74 million ounces in 2013 (4.12 million oz from SA, less than 1% increase) representing an increase in the platinum deficit to 605,000 oz from 340,000 oz in 2012. Global supply would grow 0.7% or 30,000 oz – most of it from Zimplats’ expansion in Zimbabwe.
Peter Duncan, head of market research at Johnson Matthey, also believed that declines in South African mining productivity would contribute to less supply. “We think about 300,000 oz in decline is owing to productivity year-on-year, albeit grades have diminished and there’s damage from under-investment and capex cuts,” he said.
Contributing to the supply deficit was signs of recovery in the Eurozone automobile market with the implementation of Euro 6 emission limits for heavy duty and passenger cars in January and September 2014 respectively.
“Car sales are also picking up in Germany. So in Europe we see a sharp increase in demand for platinum,” said Coombes. Platinum jewellery growth in China was also in the offing.
“You may be slightly disappointed about [platinum price] range with high of $1,580/oz and low of $1,360/oz, but the issue for the platinum is market liquidity,” said Coombes when commenting on Johnson Matthey’s platinum price forecasts.
“There are plenty of stocks available in market evidenced by low lease rates. Platinum is also tied to gold,” he said.
“The problem for gold is that it is vulnerable to selling whenever investors think the US will begin tapering [ending of quantitiative easing]. Gold can be a factor in pulling platinum down” said Coombes in respect of the company’s floor price for platinum.
Commenting on the palladium price, Coombes said the metal would average $760/oz in 2014 with a high of $815/oz and a low of $680/oz forecast. “We are more positive about palladium, but prices won’t soar off to the moon,” he said.
For palladium, supply would fall to 6.4 million oz owing to the exhaustion of Russian inventories, said Coombes. However, the deficit would also fall to 740,000 ounces from 1.15 million oz previously as recycling was expected to grow.
