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EMBARGO UNTIL 1300 HRS LONDON TIME,
16TH NOVEMBER 2004
PLATINUM MARKET MOVING TOWARDS SURPLUS, PRICE
EXPECTED TO SOFTEN
PALLADIUM DEMAND RECOVERING BUT PRICE PEGGED BY
CONTINUING OVERSUPPLY
PLATINUM demand will grow by less than 1% and the
platinum market will be very close to balance in 2004, according to Johnson
Matthey in its latest survey, "Platinum 2004 Interim Review", published
today.
Increased demand for platinum from the automobile and glass
industries will be largely offset by weaker purchases of platinum by jewellery
manufacturers to bring total demand in 2004 to 6.47 million oz, a rise of just
50,000 oz on 2003.
Auto demand is up because of the strong European
market for diesel engine cars, which use platinum autocatalysts, and because of
tighter emissions regulations being introduced in Europe and Japan. The
expansion of liquid crystal display (LCD) glass manufacturing in Asia has
boosted demand for platinum in the industrial sector, but the high price of
platinum has affected Chinese jewellery demand for the second year running,
with manufacturers reducing stocks and diverting production into other white
metals.
Although lower Russian sales of platinum are expected in 2004,
higher output from Canada and South Africa will more than compensate and total
supply is forecast at 6.43 million oz, up 230,000 oz on 2003. This will
significantly narrow the gap between supply and demand, leaving a market
deficit of just 40,000 oz.
The platinum price averaged $845 per oz in
the first ten months of 2004 (up 25% year on year), supported by hedge fund and
other investor buying and by the firmness of overall demand. In 2005, Johnson
Matthey predicts that supplies of platinum will expand faster than demand, so
that the market will move into surplus for the first time in six years. This
will lead to a slightly softer platinum price, in the range $760 to $880 per oz
for the next six months.
The PALLADIUM market is set for another 1
million oz surplus in 2004 which has put a cap on the price despite a recovery
in demand and strong speculative buying.
Demand for palladium is
forecast to rise by 730,000 oz to 6.14 million oz. Purchases by the auto
industry are projected to grow in 2004 as US auto companies use less metal from
inventory and as global light vehicle production rises. However, the largest
factor in the increase will be the introduction of palladium jewellery in China
- purchases of palladium in the first quarter of 2004 climbed as jewellery
wholesalers and retailers established stocks.
Supplies of palladium in
2004 are projected to rise by 700,000 oz to 7.16 million oz, with a large
increase in Russian metal coming onto the market as Stillwater has begun to
sell the stock of palladium it acquired from Norilsk Nickel in 2003. The market
surplus, which is forecast to reach 1.02 million oz this year, has weighed on
the price of palladium. Apart from a short lived and fund driven rally to $333
per oz in April it has been largely confined below $240 per oz.
As
supplies of palladium are projected to grow solidly in 2005, the palladium
market is likely to again be in surplus and, unless there is further investor
buying, downward pressure on the price will increase. On balance Johnson
Matthey expects palladium to trade between $160 and $250 for the next six
months.
Further information from:
Johnson Matthey plc is the world's leading authority on the production, supply and use of platinum and the other metals of the platinum group. The company's principal activities include the manufacture of autocatalysts, platinum process catalysts and speciality chemicals and the refining, fabrication and marketing of precious metals.
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