JOHNSON MATTHEY RELEASES “PLATINUM 2006 INTERIM REVIEW”

Platinum Demand To Exceed 7 Million Oz In 2006 With The Auto Industry Increasing Its Use Of The Metal On Diesel Vehicles.

Recycling Reduces Palladium Demand From The Jewellery Sector Despite Good Retail Interest.

Six-Month Price Outlook: Platinum $980 - $1,200; Palladium $260 - $380.

PLATINUM

The platinum market has moved closer to balance with a predicted deficit of only 20,000 oz in 2006. According to Johnson Matthey, global demand for platinum in 2006 is expected to grow by 5 per cent to a record 7.02 million oz, driven by increasing use in catalysts by the auto industry. Supplies of the metal have increased by almost the same rate, to a new high of 7 million oz, due to expansion in South Africa.

Emissions legislation and growing production of diesel vehicles continue to drive platinum consumption higher. Autocatalyst platinum demand is expected to grow from 3.82 million oz to 4.38 million oz in 2006. Diesel cars will account for over 50 per cent of light duty vehicle sales in Europe this year and many are now fitted with platinum-catalysed particulate filters in addition to oxidation catalysts. Increasing use of catalysts on light and heavy diesel trucks in North America is further adding to demand.

Rising and volatile platinum prices put another dent in global jewellery demand. Platinum purchases by the jewellery industry will fall by over 10 per cent to 1.74 million oz. With platinum prices high and volatile, manufacturers and retailers in all major regions have cut back inventories, while in China and Japan, recycling of old stock has also continued to affect the amount of new metal purchased.

The platinum market is expected to be close to balance again in 2007. Expansions in primary output will continue next year. Another rise in demand for autocatalysts will absorb much of this increase and there are good prospects for further growth in the relatively price-inelastic industrial sector. The performance of the jewellery sector will however continue to be heavily dependent on the price of platinum

Platinum is forecast to trade between $980 and $1,200 over the next six months. After peaking at $1,335 in May 2006, driven by intensified fund investment in commodities, the price of platinum weakened and fell below $1,100 during October. Johnson Matthey expects that if investors retain an interest in precious metals, platinum could test $1,200. Lower prices would be likely to prompt increased buying from the jewellery and other sectors, preventing the price from falling below $980

PALLADIUM

Palladium supplies are forecast to exceed demand by 1.63 million oz in 2006. An increase in the use of the metal in autocatalysts will be outweighed by lower purchases by the jewellery industry in 2006, to leave demand at 6.85 million oz, a fall of 6 per cent. With growing output of palladium from South Africa and significant sales expected from Russian state stocks, supplies will grow by 1 per cent to 8.48 million oz. This market surplus is being absorbed by investment funds.

Autocatalyst demand for palladium will rise from 3.87 million oz to 4.14 million oz in 2006. With the palladium price significantly below that of platinum, there has been ongoing substitution of platinum by palladium in three-way catalysts fitted to gasoline vehicles. 2006 has also seen the first significant use of palladium in diesel exhaust aftertreatment. Both trends are likely to continue next year.

Global palladium jewellery demand will fall by 310,000 oz to 1.12 million oz. After rapid growth in 2004 and 2005 to fill the distribution pipeline, purchases of palladium by Chinese jewellers this year have been negatively affected by the recycling of old jewellery stock. However, retail sales to consumers appear to be healthy, which suggests that palladium demand may recover as the rate of recycling diminishes.

Palladium to trade in a $260 - $380 range. Although a large surplus in the palladium market is expected in 2006, investment funds have been willing to absorb this, indicating a belief that palladium may be undervalued. Improving prospects for palladium demand may encourage funds to extend their long positions, potentially raising the price to a high of $380 in the next six months. Even without increased fund support, Johnson Matthey does not expect palladium to trade below $260 over this period.

For further information, contact:

Jo Trivedi   +44 (0) 1763 256 314
Jeremy Coombes  +44 (0) 1763 256 312
David Jollie   +44 (0) 1763 256 316
Tom Kendall   +44 (0) 1763 256 317

Platinum 2006 Interim Review is Johnson Matthey’s latest market survey of platinum group metals supply and demand. The report is free of charge. It is available in printed form on request from Johnson Matthey at the address below or it can be viewed and downloaded or printed Platinum 2006 Interim Review is Johnson Matthey’s latest market survey of platinum group metals supply and demand. The report is free of charge. It is available in printed form on request from Johnson Matthey at the address below or it can be viewed and downloaded or printed <<by clicking here.>>.

Johnson Matthey is the world’s leading authority on the production, supply and use of platinum and the other metals of the platinum group. The company’s main activities include the manufacture of autocatalysts, platinum process catalysts and speciality chemicals and the refining, fabrication and marketing of platinum group metals.