Demand for platinum is expected to rise by 5% to a record 5.9 million oz. in 2001, and the climb is being led by a 25% rise in demand from the auto industry, owing to increased market share for diesel cars in Europe and the substitution of platinum for palladium in gasoline engines.
This is one of the findings in Platinum 2001 Interim Review, published by London-based Johnson Matthey.
Growing use of platinum in specialty glass production, dental alloys and petroleum refining is driving a 3% increase in industrial demand. Purchases by jewelry manufacturers, however, are expected to fall by 11% as a result of the recycling of surplus stocks and weak consumer demand (except in China, where fabrication of platinum jewelry has continued to expand).
Supplies of platinum will increase by 5% to 5.6 million oz., owing principally to mine expansions in South Africa. The increase will only keep pace with demand, leaving the market undersupplied by about 360,000 oz., similar to the deficit in 2000. Despite the strength of demand and limited market stocks, heavy short selling has depressed prices. Johnson Matthey expects a platinum price range of $400-500 for the next six months.
Demand for palladium has tumbled, and is forecast to reach a 5-year low of 6.8 million oz., 24% below the 2000 level. Substitution of palladium in response to last year’s high prices has cut demand in all the main consuming sectors.
The decline has been accelerated by inventory reductions in the auto industry and the severe slump in demand for electronic components. In contrast, supplies are forecast to drop by only 3% to 7.53 million oz. so that the market will be in surplus by 690,000 oz.
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