Johnson Matthey's prediction of a surplus in the platinum market over the course of 2007 is likely to be restricted by the arrival of exchange-traded funds (ETFs).

Jeremy Coombes, General Manager of Marketing and Publications at Johnson Matthey, has told Reuters that the ETFs being established in platinum will eat into the expected surplus, therefore keeping demand tight and maintaining relatively high prices for the metal.

Mr Coombes warned that the impact of more ETFs could cause significant problems for the platinum market and result in platinum prices reaching new highs.

"If we see any other ETF launched, especially if we see a dollar-based ETF or one based in the US, then the potential is for that to go further than just absorbing the surplus, maybe increasing tightness in the market," he explained.

This view was supported by Bill Sandford, Director of Johnson Matthey's Precious Metals Products Division, who commented: "If the whole investment market was to become extremely large, then it becomes a more difficult job for the producers to plan their future mining."

Sources:
RTRS-UPDATE 1-Platinum may hit new record high - Matthey, 14/05/07

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