Supply shortages for platinum and palladium will be the largest in more than three decades this year on stronger demand from car companies and restricted supplies, Johnson Matthey Plc said.
Platinum consumption will beat supply by 1.22 million ounces, compared with 940,000 ounces in 2013, London-based Johnson Matthey said in its platinum-group metals report. Palladium’s deficit will expand to 1.61 million ounces, from 371,000 ounces last year. They would be the biggest shortfalls ever, based on data going back to 1975 for platinum and 1980 for palladium on the company’s website.
Platinum has gained this year as more than 70,000 workers went on strike from January in South Africa, the largest producer of the metal and second-biggest for palladium. Demand from automakers, which use the metals in pollution-control devices, helped keep the materials in shortages since 2012. Palladium reached the highest since 2011 this month, partly as western nations threatened top producer Russia with sanctions.
“Supply-side issues are common to both platinum and palladium,” Peter Duncan, general manager, market research at Johnson Matthey, said yesterday. “We do expect auto demand to keep rising. In the medium term, this is mainly to do with emissions legislation in the case of platinum, and mainly growth in vehicle production in the case of palladium.”
Output Forecasts
Johnson Matthey released its last platinum review report in November and said it will now supply similar data through Bloomberg terminals and on its website that will be updated in May and November. Its South African output forecasts were based on the assumption that the strike would end by late April, it said.
Platinum for immediate delivery rose as much as 0.7 percent to $1,478.47 an ounce in London today and has gained 7.7 percent this year, according to Bloomberg generic pricing. It reached $1,486 on May 14, the highest since March 7. Palladium advanced as much as 1.3 percent to $826.71 an ounce today and has climbed 15 percent since the end of December. It touched $829.25 on May 14, the highest since August 2011.
Gross platinum demand rose 9.1 percent to 8.77 million ounces last year as record jewelry usage and higher industrial consumption outweighed a 2.2 percent drop in auto demand, according to the company, which makes about one in three of the world’s catalytic converters. The deficit almost tripled last year. Supply gained 2.9 percent as South African output increased.
South Africa
Producers in the nation added to stockpiles in anticipation of strikes this year, Johnson Matthey said. Members of the Association of Mineworkers and Construction Union downed tools on Jan. 23 and Lonmin Plc, Anglo American Platinum Ltd. and Impala Platinum Holdings Ltd. took their offer directly to miners earlier this month.
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