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Platinum may see fall in supply, demand this year
By Hu Xiaocen |
May 15, 2012, Tuesday
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Online Edition
Online Edition
THE platinum market had an oversupply of 430,000 ounces in 2011, as a slight rise in demand was more than offset by higher supply. The unbalanced market may create even less supply and demand for the metal, a recent report said.
The report published by UK-based chemicals and precious metals company Johnson Matthey Plc said primary supplies of the metal grew 7 percent last year to 6.48 million ounces, a four-year high, mainly due to inventory releases from South Africa and higher output in North America.
Gross demand edged up 2 percent to 8.1 million ounces in 2011, as a result of heavy purchasing by the glass and petrochemical industries, while physically backed investment dropped 30 percent from the previous year. Platinum jewelry witnessed a robust increase in demand in China last year, despite the price movements of the metal, the report said.
The price of the metal fell to a two-year low of US$1,364 per ounce by the end of 2011, reflecting the supply surplus and a wider asset sell-off by investors in the fourth quarter. However, the average trading price of US$1,721 per ounce for the whole year was up 7 percent from the previous year.
The London-based precious metal specialist sees declining supply and demand of the metal this year, despite improving economic conditions.
"We foresee that supply and demand fundamentals will have a greater influence on the platinum group metals markets in 2012. There will be constraints on sales from South Africa leading to a reduction in global supplies. Gross demand for platinum is also likely to decline, due to lower purchasing for cyclical industrial applications, notably in the glass sector," said the report.
It wrote in the report that although China faces weak demand for its exports, growing domestic demand and government stimuli appear to have resulted in a 'soft landing' for the economy. But inflationary pressures together with high interest rates and tight credit may act as a brake on the country's consumer spending, it said.
The report published by UK-based chemicals and precious metals company Johnson Matthey Plc said primary supplies of the metal grew 7 percent last year to 6.48 million ounces, a four-year high, mainly due to inventory releases from South Africa and higher output in North America.
Gross demand edged up 2 percent to 8.1 million ounces in 2011, as a result of heavy purchasing by the glass and petrochemical industries, while physically backed investment dropped 30 percent from the previous year. Platinum jewelry witnessed a robust increase in demand in China last year, despite the price movements of the metal, the report said.
The price of the metal fell to a two-year low of US$1,364 per ounce by the end of 2011, reflecting the supply surplus and a wider asset sell-off by investors in the fourth quarter. However, the average trading price of US$1,721 per ounce for the whole year was up 7 percent from the previous year.
The London-based precious metal specialist sees declining supply and demand of the metal this year, despite improving economic conditions.
"We foresee that supply and demand fundamentals will have a greater influence on the platinum group metals markets in 2012. There will be constraints on sales from South Africa leading to a reduction in global supplies. Gross demand for platinum is also likely to decline, due to lower purchasing for cyclical industrial applications, notably in the glass sector," said the report.
It wrote in the report that although China faces weak demand for its exports, growing domestic demand and government stimuli appear to have resulted in a 'soft landing' for the economy. But inflationary pressures together with high interest rates and tight credit may act as a brake on the country's consumer spending, it said.
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