Platinum stockpiles to fall 19% to 2 million oz in 2016

PLATINUM stockpiles were forecast to fall a hefty 19% to about two million ounces this year as newly refined supply fell and investment demand increased, said the World Platinum Investment Council (WPIC).

The size of the stockpile is thought to be a major reason why the platinum price has been relatively subdued despite a number of supply disruptions, especially in South Africa which is the world’s largest platinum producer.

The price of platinum has fallen about a third since the beginning of 2014 but it has shown signs of staging a recovery, rising nearly $200/oz since the beginning of the year. It was last trading at $1,053/oz.

Commenting in its latest quarterly update, the WPIC said the forecast deficit for 2016 of 135,000 oz of platinum would increase to 455,000 oz.

Paul Wilson, CEO of the WPIC said the market for platinum continued to tighten as supply contracted and demand increased, driven by significant investment demand growth in Japan.

“Although the forecast for the full year is for supply to recover from the temporary interruption in the first quarter, the expected full year deficit is larger than the 2015 deficit,” he said.

“The recent price increase is likely to further reduce the availability of vaulted investor holdings to meet market shortfalls in the coming months,” he added.

Total global platinum demand was projected to increase to 8,26 million oz during 2016, a slight increase from 8,22 million oz in 2015.

Against this total supply is forecast to decrease by 1% to 7.8 million oz. This is lower supply than the pre-strike level of 2013. Lower refined production from South Africa and Russia outweighs increases in other regions and from recycling.

Refined supply is forecast to be 5.895 million oz in 2016, with total mining supply at 5.995 million oz. Sales from producer inventory expected, said the WPIC.

Recycling, which analysts expect to remain a major factor in platinum supply, was forecast by the council to increase 6%, equal to some 95,000 oz to a total of 1.81 million oz. Secondary supply from autocatalysts would grow 10% to 1.31 million oz, it said.

For the first quarter, total platinum supply fell 210,000 or 11% quarter-on-quarter to 1,74 million oz, with total mining supply slipping 230,000 oz and recycling growing by only 20,000 oz.

Refined production fell 420,000 oz quarter-on-quarter owing to a decline in South African refined output caused by a temporary refinery closure, the effect of which was not totally offset by sales of 150 koz from producer inventory, said the WPIC.

Global platinum demand rose 180,000 or 10% quarter-on-quarter to two million oz despite lower jewellery (-11%) and industrial usage (-6%), as automotive demand improved (+2%) and investment demand enjoyed a positive quarter after seeing disinvestment in the fourth quarter of last year, said the council.

1 COMMENT

  1. Why are South afrikan mines producing so much platinum. Why not try to stabilize The price, when they control 85% of The metal. Incredible stupid must they be. The World want to go green and platinum is The key for that

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