FACTS ‘N’ FIGURES — Platinum’s wild ride not over

The erratic pattern of Russian platinum sales is likely to be the chief factor affecting the metal’s price in 1998, according to a report published by London-based metals trader Johnson Matthey.

According to Platinum 1998, prices ballooned to US$497 per oz. in June 1997 when lease rates rose as a result of the drawing down of market stocks to meet the Russian shortfall. Shipments from Russia resumed in July, but by the end of the year, market sentiment was weakened by the economic crisis in Southeast Asia and the fall in the gold price. Exceptionally high sales by Russian state-exporter Almaz depressed the platinum price in December to US$342 per oz., its lowest level in nearly five years.

Exports of platinum from Russia in 1997 are estimated at 900,000 oz., off 320,000 oz. from 1996. Exports from South Africa rose 9%, balancing the decline in Russian shipments and leaving overall supplies at 4.97 million oz.

Demand for the metal increased by 5% in 1997, to 5.2 million oz., exceeding supply by 230,000 oz. The use of platinum in jewelry fabrication was boosted by growth in the U.S. and Chinese markets. There was also a rise in consumption attributed to newer industrial applications, and new platinum investment products, particularly the new U.S. American Eagle coin, helped bolster demand. However, demand for platinum in autocatalysts was further eroded by the substitution of palladium.

Demand for platinum in 1998 is forecast to rise 2 to 3%, with higher consumption in new jewelry markets and advanced industrial applications outweighing lower sales to automakers and Japanese jewelry makers. Demand is again likely to outstrip supply, as neither South African nor Russian producers have the flexibility to significantly increase platinum supply in the near term. Russian platinum inventories, which have buoyed supply when demand outstripped production, are believed to be low.

Russian shipments of platinum were suspended for the first four months of 1998, and sales will again be concentrated in the second half of the year.

This pattern is likely to be the main influence on the price, which is anticipated to fluctuate between US$370 and US$450 per oz. for the rest of the year.