Large increases in SA and North American recycled platinum will keep the global market in an oversupplied position, with few signs yet of fundamental drivers to push the metal’s price out of the doldrums.
The forecast for 2019 issued by World Platinum Investment Council, a body set up by SA’s platinum mining companies, noted a market surplus of 375,000oz of the metal, down from the previous year’s 670,000oz of oversupply.
The council, which issues market data compiled by SFA Oxford, noted total platinum supply would rise 4% to 8.37-million ounces on the back of higher mined production as well as recycled material coming from autocatalytic devices used in diesel engine exhausts.
Recycled platinum will rise 3% to 1.995-million ounces, of which autocatalysts will contribute 1.495-million ounces, a 5% increase.
Platinum demand would rise 8% to 7.995-million ounces on the back of higher investment demand, which will offset falls in the other three key areas of consumption, being autocatalysts, jewellery and industrial applications.
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Investment demand was forecast to jump by 785,000oz.
The report stands to be compared with the latest outlook from Johnson Matthey, a large, independent chemical firm that uses platinum group metals (PGMs), which also released its forecast at the start of Platinum Week in the UK.
Johnson Matthey, which uses a different methodology to assess the global platinum’s supply and demand drivers, suggested the market would slide into a deficit of 127,000oz during 2019 from a 372,000oz surplus the previous year.
SA was forecast to deliver 4.565-million ounces out of the 6.189-million ounces of total mined supply in 2019, the country’s highest output since 2015. SA is the world’s largest producer of platinum.
However, Johnson Matthey sounded a note of caution around wage talks due to start at major producers in coming months and the potential for strike-related production disruptions and the negative consequences of repeated power shortages as SA experienced in February and March.
Anglo American Platinum (Amplats) and Impala Platinum, the world’s two largest sources of the metal, released data showing their combined losses of the metal were valued at close to R2bn during the first quarter because of power disruptions.
Amplats said it had not processed 18,000oz of PGMs at its concentrators during the March quarter and had another 74,000oz of PGMs unprocessed at its smelters. Implats said it had not processed between 5,500oz and 7,500oz of platinum in the quarter.
“The outlook for PGM mining in SA is increasingly uncertain, with producers facing steep increases in electricity prices, periodic disruption to power supplies, and a risk of industrial action during forthcoming wage negotiations,” Johnson Matthey said.