Demand strengthens for Platinum group metals

Substantial growth in demand for platinum by the auto and jewelry industries, combined with a recovery in industrial consumption, boosted demand by 11% to 4.51 million oz. in 1994, according to Platinum 1995, published by Johnson Matthey.

Supplies of platinum increased by 3% to 4.53 million oz. A decline in shipments from South Africa was offset by a considerable increase in Russian sales. Supported by firm demand and investor interest, the average price in 1994 rose by 8% to US$405.25.

Autocatalyst demand expanded by 11% to 1.865 million oz. mainly due to rising auto production and tighter legislation in the U.S., states Johnson Matthey. Recovery of platinum from spent catalytic converters was 320,000 oz. Worldwide demand for platinum in jewelry rose by 7% to 1.72 million oz., stimulated by increased fabrication of pure platinum jewelry in Japan.

Industrial demand increased by 15% to 800,000 oz. in response to growth in high technology and environmental applications. Demand for platinum in physical investment products last year rose by 90,000 oz. to 395,000 oz.

Supplies of platinum from South Africa fell by 6% to 3.16 million oz. last year, with shipments close to actual mine output following extensive sales from platinum stocks during 1993.

Russian sales increased by 49% to 1.01 million oz., and Johnson Matthey estimates that supply substantially exceeded production and that metal was drawn from Russian government stocks.

In 1995, Johnson Matthey expects the use of platinum in autocatalysts, jewelry and industrial applications to increase again, though less sharply than in 1994. The growth in demand should be matched by additional supplies, maintaining the market close to balance. The price of platinum is expected to range between US$420 and US$470 for the rest of this year.

Palladium demand grew by 13% to 4.83 million oz. in 1994, mainly due to increased production of electronic components and wider adoption of palladium-rich autocatalysts. Supplies of palladium rose by 23% to 5.29 million oz., as Russian sales reached a record of 3.3 million oz.

Strong industrial and speculative demand boosted the price of palladium to US$178 in April of this year from US$123 in January of 1994, and may drive the price to US$200 before the end the year.

Rhodium demand grew by 6% to 387,000 oz., but supplies reached 421,000 oz., exceeding demand for the fourth consecutive year. The price of rhodium fell from US$980 in January, 1994 to below US$500 in March, 1995.