Global platinum demand is expected to jump by 9 percent due to solid investment demand, the World Platinum Investment Council said in a report on Friday. Photo: Supplied

JOHANNESBURG - GLOBAL platinum demand is expected to jump by 9 percent due to solid investment demand, the World Platinum Investment Council (WPIC) said in a report on Friday.

The WPIC, which stimulates demand for physical platinum, said the increase in platinum demand would likely see the annual 2019 market balance narrowing to a surplus of 345000 ounces (oz) from the previously forecast surplus of 375000 oz.

WPIC’s chief executive Paul Wilson said the report showed continued investment demand growth, driven by investor recognition of platinum's demand and price-growth potential.

“This has been supported by uncertain capital markets that have seen inflows for most precious metals exchange traded funds (ETFs) this year, of which platinum has been a stand-out beneficiary. Institutional investment demand has had an unprecedented start this year, with ETF buying of 720000 oz in the first half of 2019,” said Wilson.

Wilson said the unprecedented 855000 oz of investment demand in the first half of 2019 was driven by a surge in ETF holdings, which gained 720000 oz.

Platinum, which is used in autocatalysts to reduce harmful emissions and also in jewellery, has fallen to $751.25 (R11123.91) an ounce last year from about $1800 an ounce in 2011, as declining demand pushed the market into surplus in 2017 and 2018, the WPIC said.

The platinum price in late August was trading near $1000 an ounce.

Platinum has struggled compared to peer metals, palladium and rhodium, which have soared in 2019. Palladium increased to $1185 an ounce in the year to June from $975 in the year to June 2018, while rhodium rose $2568 an ounce in June 2019 from $1501 an ounce in June 2018.

Platinum's discount to rhodium and palladium has continued to spur efforts to consider the mix of metals used in gasoline light-duty catalysts.The industry is leading research, development and testing for potential addition of platinum to gasoline systems in key automarkets.

The projected demand growth was expected demand decreases in the automotive and jewellery segments of 4 percent and 5 percent, respectively. Quarterly jewellery demand slipped further year-on-year by 30000 oz due to a continued decline in Chinese demand.

Jewellery demand remained a source of platinum demand.

Impala Platinum said last week it was working with the Platinum Guild International on initiatives aimed at reigniting growth in the Chinese market, where several challenges and constrained challenges in that market had limited the reach of promotional efforts.

BUSINESS REPORT