Platinum Group Metals: Platinum To Remain In “Gross Surplus” in 2012; Palladium Deficit
Platinum is forecasted to be in gross surplus in 2012, from PRODUCTION and cost pressures in South Africa would contributing towards “solid support” for the platinum. GFMS estimated that platinum’s gross surplus eased by some 12% last year to 735 000 oz although this remained substantial by historical standards.
GFMS reported a 4% growth in platinum autocatalyst demand, however, this was restrained by the effects of continuing substitution (in favour of palladium), lacklustre vehicle production in Europe and a natural disaster in Japan last year.
However, demand for platinum in the manufacture of autocatalysts may be subdued in Europe amid the ongoing Eurozone crisis.
This is according to Thomson Reuters GMFS which, in its 2012 platinum and palladium report published today, forecast a trading range of between $1,465 per ounce and $1,775/oz for platinum in the remainder of 2012.
Investment demand was a factor in last year’s pricing of platinum, said Philip Klapwijk, global head of Metals Analytics at Thomson Reuters GFMS.
“The fact that platinum prices remained elevated over much of last year – enabling a new all-time high in annual average terms of $1,722 – was testament to broadly favourable investor sentiment, evidenced by a 12% rise in world investment demand,” he said.
Platinum is currently trading at $1,557/oz while palladium was last quoted at $665/oz.
While palladium remained in a gross deficit in 2011, which was likely to increase in 2012, precious metals consultancy Thomson Reuters GFMS reported on Thursday. Its gross deficit almost halved to 313 000 oz (9.7 t), owing in large part to a relatively subdued 2% rise in global fabrication, which nonetheless reached an 11-year high.
“Palladium prices are also likely to benefit from the favourable investor climate towards precious metals, while the downside may be limited as palladium’s demand base in autocatalyst is less exposed to Europe and is quite broadly based geographically,” said Klapwijk.
This featured a solid 5% lift for palladium autocatalyst demand (also an 11-year peak) driven by firmer demand in gasoline applications and substitution-related gains at the expense of platinum.
However, these gains were partially offset by weaker offtake in most other areas of palladium fabrication demand, with the heaviest losses having emerged in jewellery, especially in China, which declined to an eight-year low.
GFMS stated that palladium prices still posted a record high yearly average in 2011 of $734/oz, despite a smaller gross deficit, substantial liquidations from exchange traded fund holdings and a reduction in investors’ long-term positions on futures markets.
“This followed a dramatic rise in prices during late 2010 and early 2011. And even though last year saw palladium prices fall by 20% on an intra-year basis, the decline was limited to the last four months, and driven very much by profit taking,” Klapwijk commented.
He added that palladium prices were also likely to benefit from the favourable investor climate towards precious metals, while the downside might be limited as palladium’s demand base in autocatalysts was less exposed to Europe and was more broadly based geographically.
Palladium is forecast to trade in a range of $575 to $775 through to end-2012, Thomson Reuters GFMS said.
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