World Platinum Investment Council
Platinum outlook ‘remains lacklustre’ as demand and investment stall
The World Platinum Investment Council expects South African platinum production to slide further in 2017
South African platinum production will slide further in 2017, says the World Platinum Investment Council, as mines are closed in a difficult market that has curtailed investment in growth.
The overall decline in global platinum supply would match a similar fall in demand, it said, describing the off-take of the metal as lacklustre.
In its latest quarterly report, the council says that platinum consumption in the autocatalyst manufacturing sector is still under pressure.
The council was set up in 2014 by six South African platinum mining companies to stimulate investment demand in the metal.
Catalysts, which scrub noxious gases from exhaust emissions, account for about 40% of platinum use, with jewellery at 35%. Industrial and other uses consume 20% and investment demand makes up the balance.
SA provides 80% of the world’s refined platinum.
Soon after comments from Northam Platinum CEO Paul Dunne that South African production would fall below 4-million ounces in 2017 – well off a 2006 peak of 5.3-million ounces — the council forecast another dip in SA’s output, expecting it to fall to 4.24-million ounces from 4.255-million ounces in 2016.
Dunne said there had been a dearth of spending on replacement projects and that some new platinum projects were likely to be stillborn in the prevailing stagnant platinum price environment. The council said the closure of mines, such as Bokoni, shared by Atlatsa and Anglo American Platinum, would along with restructuring, lead to the fall in this year’s output.
Full-year demand from the autocatalyst makers was forecast to fall 2% in 2017, to 3.36-million ounces, with the diesel-fuel share of the automotive market in Europe and India declining, although car makers were looking at fresh technology to "rehabilitate diesel cars’ reputation and popularity to some extent", the council said.
Platinum use in diesel engines to power small and medium-sized cars in western Europe, the single biggest market for diesel-powered vehicles and platinum-based autocatalysts, was losing ground to petrol-powered vehicles, which used palladium catalysts, the report said.
Paul Wilson, the council’s CEO, said the negative effect of electric cars on the platinum market was "significantly overestimated". The global platinum market was forecast to be almost in balance, with a 15,0000-ounce deficit compared with the 390,000-ounce deficit in 2016 and a 335,000-ounce shortfall in the previous year. There had been an "intriguing" growth in platinum jewellery demand in India.
This offset a fall in Chinese demand as Indian demand rocketing 48% during the second quarter of 2017.