Global platinum production will fall 10% to 5.84m ounces in 2012, helping to move the market from a surplus to a deficit for the year, Johnson Matthey says in its Platinum 2012, Interim Review, released this morning.
While gross demand is expected to remain strong at 8.07m ounces, the 12% fall in supplies from South Africa to an 11 year low of 4.25m ounces and a decline in auto catalyst recycling will “help decidedly shift the market into a deficit of 400,000 ounces.”
According to Johnson Matthey’s Publications Manager, Jonathan Butler, the group is forecasting a 600,000 ounce reduction in supplies for the year and says at the moment, it’s difficult for us to see any considerable growth in South Africa.
“Of course the problems on the supply side still continue with labour disruption. We’ve also seen in the past year a number of operations close as a result of high costs and weak prices. We may indeed see further closures of marginal operations unless conditions improve and of course we are expecting the full impact of the supply disruptions from strikes this year to be felt into 2013,” he told Mineweb.com’s Metals Podcast.
Asked what the sector might look like longer term, Butler said it is probably too early to say yet what the end result will be but, “a number of companies are conducting operational reviews at present and indications seem with pressures continuing from labour and from high costs, that there could be further closures and consolidations.”
On the demand side of the equation, while gross demand for autocatalysts is expected to soften 1% to 3.07m ounces and Johnson Matthey says industrial demand should subside by 13% to 1.79m ounces, both jewellery and physical investment demand are expected to remain positive, with jewellery demand hitting a three year high of 2.73m ounces.
According to Butler, the expectation was for lower demand, but, ” although vehicle production has indeed fallen in Europe, we’ve actually seen growth elsewhere, particularly in Japan and North America which has helped PGM demand hold up pretty well.”
Looking ahead to 2013, Butler says the group is positive on the strengt of th e US auto marke but says it is difficult to be optimistic on European auto production.
But, he adds, there are a number of legislation driven trends coming into force next year which should help demand.
“Overall, although we’re seeing weakness in European markets continuing in terms of vehicles, technologies actually are driving platinum usage up and we see continuing growth coming from places like India which have very strong diesel components to their car markets. We’ve seen growth this year, we expect further growth next year.”