WPIC Revises Platinum Deficit Forecast

PlatinumJohannesburg: A sharp rise in investment demand for platinum in the second and third quarters of this year has prompted the World Platinum Investment Council (WPIC) to widen its platinum deficit forecast for 2015 to 445 000 oz, compared with the previously forecast 190 000 oz deficit, reports Mining Weekly.

The deficit would, however, be lower than the 785 000 oz deficit recorded in 2014. The WPIC reported in its Platinum Quarterly report for the second quarter of this year that supply for the full year was expected to increase by 9% to 7.91-million ounces, owing to the recovery in South Africa’s output following strikes in 2014, as well as increased platinum recycling. Demand for the year was expected to increase by 4% year-on-year to 8.36-million ounces, owing to higher investment demand of 310 000 oz on the back of higher platinum bar sales in Japan and “substantial” exchange-traded fund (ETF) buying in South Africa. The WPIC noted that continued growth in automotive, industrial and investment demand for platinum would offset lower jewellery demand in the full year.

Meanwhile, the organization pointed out that the platinum market had recorded a 55 000 oz deficit in the second quarter of the year. This was smaller than the 230 000 oz deficit recorded in the first quarter, owing to a marked increase in investment demand, which had offset increased South African mining supply and despite lower jewellery demand in China. Platinum supply had increased by 11% quarter-on-quarter to 1.98-million ounces as both secondary supply and total mine supply had increased.

Mining supply rose by 160 000 oz to 1.5-million ounces in the second quarter, owing to higher output from South Africa, Zimbabwe and Russia. Further, a recovery in jewellery recycling more than offset slightly lower secondary supply from scrapped auto catalysts. Demand rose by 15 000 oz as lower jewellery, industrial and automotive demand was more than offset by the return of growth in investor holding ETFs. Automotive demand for platinum in exhaust after-treatment also remained robust, at 875 000 oz for the quarter, essentially level with the first quarter.

Demand remained particularly strong from the main markets of Western Europe and the US. Vehicle sales have been strong so far in 2015 and the growth in forecast sales for Western Europe was 7% higher for this year. In most other major regions, growth rates this year were lower than in 2014. Germany, overall, remained the largest market, with sales for the first half of the year up by 81 000 units year-on-year. Platinum jewellery demand in the second quarter was estimated at 665 000 oz, an 11% decline quarter-on-quarter. Consumer demand decreased in several regions during the quarter, despite the lower platinum price.

Meanwhile, platinum requirements for industrial end-uses declined by an estimated 4% quarter-on-quarter to 400 000 oz, with lower demand from the glass and chemical sectors. Demand for new plants and expansions by Chinese glass fabricators were also lower in the quarter owing to the timing of new plant construction, while chemical sector consumption decreased in North America, Western Europe and Japan for the same reason.

PRODUCTION: South Africa’s refined production rose to 1.08-million ounces in the second quarter, as operational and safety performances improved, compared with the below-par production of 890 000 oz in the first quarter. Increased output from Zimbabwe and Russia contributed an additional 20 000 oz and 10 000 oz respectively to the increased mine supply, compared with the first quarter.