Platinum market back in surplus

LONDON: The platinum market edged back into surplus in the second quarter, an industry report said yesterday, as rising supply and a drop in automotive, jewellery and industrial demand erased the previous quarter’s 305,000ounce shortfall.

“With investment, which held steady in the last quarter, also expected to halve this year, the market is set to pull close to balance in 2017 after years of deficit,’’ the World Platinum Investment Council said in its latest Platinum Quarterly report.

The WPIC, which is funded by platinum mining companies, is forecasting the deficit will shrink to just 15,000 ounces in the full year from 390,000 in 2016, as demand from carmakers, jewellers, industrial users and investors declines.

“The reason for the demand fall to create the balanced market is mainly from industrial and investment,” the WPIC’s director of research Trevor Raymond said.

“There have been five consecutive years of deficit,” he added.

After hitting a more than seven-year low in 2016, platinum prices have risen 10% this year, but have lagged a broader rebound in precious metals — gold is up more than 15% and palladium around 45% in the same period.

Automotive consumption, the biggest single demand segment for platinum, which is used in catalytic converters, fell to 850,000 ounces in the second quarter, down 4% from the first three months of the year, the WPIC said.

For the full year, it is forecasting a 2% drop in the segment, with western Europe seeing the biggest percentage-terms decline. Automotive demand has been hit by dwindling market share of diesel cars in Europe, which use a heavier loading of platinum than the gasoline fleet.

Jewellery demand is seen falling 1%, with China, the single biggest market for platinum jewellery, forecast to post an 8% drop. Other regions, notably India, are expected to see higher demand.

“China jewellery is a little more than 55% (of global jewellery demand), and together India and the United States are 20%,” Raymond said. “Growth in 20% of the demand has offset the weakness in China.”

Investment is tipped to drop sharply to 250,000 ounces, less than half the previous year’s total, due in part to a decline in Japanese bar buying, which has been strong in recent years.