WPIC Sees Fifth Straight Platinum Deficit In 2016, Although Smaller One

By Paul Ploumis (ScrapMonster Author)

March 03, 2016 03:09:41 AM

(Kitco News) - The World Platinum Investment Council looks for the global platinum market to be in a deficit for the fifth straight year in 2016, although the deficit is likely to cut by more than half, the organization said Wednesday.

The WPIC issued a quarterly report estimating that the market was in a deficit of 380,000 ounces in 2015. This is expected to narrow to 135,000 ounces in 2015.

The report is largely based upon research and analysis conducted by SFA (Oxford).

The 2015 deficit was driven by a 5% increase in automotive demand to 3.455 million ounces, up from 3.29 million in 2014 and 3.16 million in 2013, said the report.

“Despite the impact of the Volkswagen diesel investigation, demand growth in 2015 was led by Western Europe vehicle sales growth, up 9% year-on-year, where the imposition of the new Euro 6 legislation also increased platinum loadings per car,” the WPIC said. “Automotive demand from India also grew by 9%.”

Global investment demand increased by 110,000 ounces over the year, with a global fall in exchange-traded-fund holdings more than offset by a surge in demand for bars and coins, particularly in Japan, the WPIC reported. Jewelry sales contracted by 4% to 2.88 million ounces last year due to a fall in Chinese demand.

Meanwhile, refined production grew by 24% last year to 6.04 million ounces, led by a 41% increase in output from South Africa. Operations affected by 2014 strikes returned to pre-strike levels, and producer sales again exceeded refined production, the report said.

The global supply from recycled platinum fell by 15% to 1.725 million ounces, as lower platinum group metals prices reduced the flow of scrap catalysts from collectors, while depressed steel prices reduced the scrapping of vehicles, the WPIC said.

The organization reported that above-ground stocks ended 2015 at 2.315 million ounces, down by 14% from 2.695 million in 2014.

For 2016, the WPIC projected a 1% decline in refined production to 5.97 million ounces. South African supply is projected to fall by 2% due to expected disruptions due to wage negotiations and safety stoppages. Recycling supply is forecast to rebound by 14% in 2016, however, to 1.96 million ounces.

Automotive demand is predicted to increase by 3% to 3.545 million ounces on the back of another year of growth in sales of light vehicles coupled with higher loadings per vehicle, the WPIC said. Jewelry sales are expected be up 1% to 2.92 million ounces in 2016, boosted by a recovery in China and strong demand growth in India.

Courtesy: Kitco News