Platinum market shifts to deficit, first time in 7 years - GFMS

[pmbug]

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Speaking at the launch of the group's Platinum & Palladium Survey in Johannesburg, Thomson Reuters GFMS, Research Director for Mining, William Tankard, said the market swung to a marginal deficit of 83,000 ounces in 2012.

According to GFMS, this trend reversal was "almost completely attributable to supply side factors". The report indicates that all three major sources of refined metal contracted last year. Mining output fell 10%, recycling of autocatalysts slipped 9% and scrap jewellery sales dropped 19%.
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Despite this, however, it is important to note that, as a result of the significant run of overall surpluses, above ground stocks of bullion remain substantial, with GFMS estimating them at more than 4.3 million ounces. .

On the other side of the equation, demand rose 1% over the course of the year, but, was pulled down by a 4% contraction in autocatalyst demand, which fell on the back of weakness in the platinum-heavy European market, "coupled with the twin draw of substitution (to palladium in diesel applications) and thrifting the intensity of metal use," the report said.

During the period, jewellery demand rose 9%, boosted in the main by China, while usage in the petroleum industry rose by 1 fifth.

Looking ahead, Tankard said: “The platinum price this year remains in the balance and will very much be determined by supply side factors again in 2013. Should restructuring take place and supply be kept off the table we would expect a reasonably positive investor sentiment to take on a small surplus and drive a pick-up in prices through the year, to average almost $1600."

But, he warned, "With more than seven months’ demand cover, or one year of South African mine production sitting as stock in the terminal markets, there is plenty of metal about. The demand outlook, particularly in Europe, remains fragile and platinum supply therefore needs to be kept reined in for prices to strengthen and adequately compensate continued long term investment for an industry with unrelenting cost inflation."

More: http://www.mineweb.com/mineweb/content/en//mineweb-platinum-group-metals?oid=188643&sn=Detail

 

[CharlesMcLain]

Seems like bad days for precious metals. Despite being a long-time precious metals enthusiast, I am very jittery over this news.

 

[ancona]

With all the trouble in SA, and recent expropriations all over South America, they will not be able to hold back precious metals for long. couple all of this with the recent open pit landslide taking a huge supply of base metal and by-product PM's off line and I can see inventories doing the slow decline for a long time before things normalize again.