JOHANNESBURG - The suppply of platinum is expected to constrict this year compared to 2017, while demand for the precious metal is forecast to be marginally up for 2018 despite a fall in total global automotive demand.
In its Platinum Quarterly publication released yesterday (May14), the World Platinum Investment Council (WPIC) said the South African mine supply for the precious metal fell in the first quarter of the year to its lowest level since 2016, while growth in commercial vehicles was insufficient to offset lower demand from passenger cars.
The council predicted that the fundamental shifts would contribute to a reduction in the level of overall surplus for 2018, down to 180 kilo ounces (koz) from a revised surplus figure of 315 koz in 2017.
The first quarter of the year was in deficit by 125 koz.
Meanwhile, the report predicted a recovery in both jewellery and industrial demand for platinum in 2018, with platinum jewellery predicted to surge 2 percent this year.
“This will be powered by strong global economic growth, alongside continued demand from India as larger retailers with multiple stores gain market share from the independent sector,’ the report stated.
Platinum demand from China was predicted to increase as a platinum campaign targeting millennials bore fruit.
“An increase in industrial demand (+60 koz) is expected to be fuelled by requirements from the petroleum industry, with use in refining up, led by the recovery in Japan.”
In line with previous forecasts, the report stated that investment demand was predicted to be 250 koz in 2018.
WPIC chief executive Paul Wilson said the report showed resilient demand for platinum.
“We are still convinced that supply remains constrained. The year will be in surplus overall, albeit it at lower level than 2017,” said Wilson.
He said the price of platinum , “which remains at historic lows compared to gold”, would be high on the agenda of the Platinum Week in London this week.
“I will certainly be urging those I meet to focus on the fundamentals, rather than short-term negative sentiment that is clouding opinions at present. The opportunity for the global platinum market to grow remains undiminished,” he said.
“I have been personally encouraged by recent activities in China, where a number of new WPIC product partnerships, clearly focussed on retail investors, are in the pipeline.”