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May 14, 2012
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Platinum surplus expected this year: study

By
AFP
Published
May 14, 2012

LONDON - Platinum will remain in surplus this year, weighing on prices, but sister metal palladium will switch into a deficit as demand recovers, industrials group Johnson Matthey predicted Monday.


Platinum - Photo: Corbis

"The platinum market is forecast to remain in surplus in 2012, which is likely to keep the price in a range of $1,450-$1,750 per ounce in the next six months," it said, adding supply and demand would be "similar" to 2011.

Platinum demand rose two percent last year to 8.1 million ounces on the back of heavy purchasing by the glass and petrochemical industries, according to the study from London-based Johnson Matthey.

At the same time, supplies jumped by seven percent to 6.48 million ounces and recycled stocks rallied 12 percent to 2.05 million tonnes. That gave an overall surplus of 430,000 tonnes for 2011.

Palladium was meanwhile forecast to move into deficit in 2012, due to lower shipments of Russian stockpiles and increased demand for catalytic converters.

"The palladium market is forecast to swing back into a deficit this year. We expect that there will be one further year of sales from Russian state stocks in 2012, albeit at a much reduced level than previously," said Johnson Matthey.

"Gross demand in autocatalysts is expected to rise in line with higher gasoline vehicle output ... resulting in a modest increase in overall demand and pushing the market into a deficit."

"The positive fundamentals (of supply and demand) are likely to support the price between $620 and $800 per ounce ... in the next six months."

Palladium demand fell 13 percent to 8.45 million ounces last year as many investors sold their holdings.

Supplies were flat at 7.36 million ounces, but the market was pushed into a surplus by Russian state sales and higher recycling.

In late European trading on Monday, the price of platinum stood at $1,448 an ounce, while palladium stood at $597 per ounce.

Last year, platinum had struck a three-year peak of $1,916.75 per ounce in August 2011 and palladium scaled a 10-year pinnacle of $862.25 in February 2011.

However, the pair have since fallen on concerns over a global economic slowdown and the ongoing eurozone debt crisis.

Both metals are used in electronics, dentistry equipment, chemical processing and jewellery, and are also involved in the production of catalytic converters.

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