Price of platinum expected to edge up

The price of platinum is forecast to begin rising, albeit slowly, after touching a 12-year low during 2017, bringing some respite to mining companies in SA where more than half the country’s platinum mines are unprofitable.

In the GFM Platinum Group Metals Survey 2018 from the Thomson Reuters metals consultancy, the analysts who compiled the report said that after six years of declining prices, the platinum price was forecast to begin a muted recovery during 2018.

“Our expectation of a price rise is predicated on a small deficit this year, of nearly 300,000 ounces,” they said.

“We think this will be fuelled by both a contraction in supply, chiefly from South African mines, as well as rising demand,” they said.

“Given this backdrop, we expect platinum to exceed $1,000 per ounce at times in the second half of the year, a level that has exceeded spot prices for all but one week since February 2017,” the analysts said.

In SA, there was a combination of reduced capital expenditure, a lack of new projects and closures of marginal producers. SA is the world’s leading source of platinum.

Supply from SA is expected to fall to a 10-year low of 4.14-million ounces in 2018, excluding the strike-affected 3.2-million ounces recorded in 2014 when there was a sixmonth work stoppage as the Association of Mineworkers and Construction Union demanded higher wages.

The country accounted for 4.25-million ounces of platinum in 2017 out of total world mined supply of 5.9-million ounces.

For 2018, world mined supply is forecast to fall by 1% to 5.77-million ounces.

Platinum from scrapped autocatalysts, which scrub noxious gases out of diesel-driven engines, will continue its inexorable rise, increasing by 5% in 2018 to 1.23-million ounces. A decade ago, this source supplied 786,000 ounces of platinum.