By Clara Denina
LONDON, March 11 (Reuters) – The platinum market is expected to be in deficit of 235,000 ounces this year, a report by the World Platinum Investment Council (WPIC) estimated on Wednesday, down 66 percent from 2014 levels, on stronger mining and recycling supply growth.
Above-ground stocks of the metal that have prevented prices from benefiting from a tight market are forecast to have declined 20 percent in 2014 and are expected to drop a further 8 percent this year. Platinum prices fell 12 percent in 2014 and are now at their lowest since 2009 around $1,140 an ounce, despite heading for a fourth straight annual deficit.
Industry-funded WPIC, which commissioned the report from the consultancy SFA (Oxford), estimated above-ground platinum inventories, excluding exchange-traded funds, metal held by exchanges, and industry working inventories, at 2.53 million ounces at the year-end.
Mined platinum output from South Africa, the source of three-quarters of mined supply of the metal, is forecast to rise 31 percent this year. The world’s largest platinum miners, crippled by a five-month stoppage in 2014, are seen ramping up refined production to above 4 million ounces this year. Overall platinum supply is forecast to rise 10 percent to 7.965 million ounces this year.
Demand is expected to increase by a modest 3 percent, largely on the back of a drop in investment and lacklustre growth in the two largest sectors – offtake by jewellers, and buying by carmakers, who use the metal in catalytic converters.
Platinum investment volumes are seen declining 63 percent to 50,000 ounces this year, after an 85-percent drop in 2014. Â Autocatalyst demand, chiefly from the makers of diesel-engined vehicles in Europe, is expected to rise by 4 percent, the WPIC said.
“The growth in platinum demand from the European automotive sector will be higher in 2015, because there will be more cars and the loadings are higher,” WPIC director of research Trevor Raymond said, referring to tightening European legislation on exhaust emissions.
Jewellery demand should rise 3 percent this year. Jewellery buying from China, which accounts for two-thirds of the global platinum jewellery market, fell by 1.3 percent in 2014, as the sharp drop in prices led to a reduction of inventories held rather than a rush to stock up. Chinese jewellery growth will remain flat in 2015, Raymond said.
