Net global platinum demand is forecast to decrease by 4.4 per cent to 5.92 million ounces in 2009, according to Johnson Matthey's "PLATINUM 2009 INTERIM REVIEW", released today. Gross autocatalyst demand is set to drop by a third to 2.48 million ounces due to cuts in vehicle production in most regions. Industrial demand will fall due to soft consumer demand and destocking of products and materials in many sectors. The lower price of platinum is expected to boost jewellery and physical investment demand to 2.45 million ounces and 630,000 ounces respectively. Platinum supplies are expected to increase by 110,000 ounces to 6.06 million ounces despite a fall in underlying mine production. As a result, the platinum market is forecast to be in surplus by 140,000 oz in 2009.

Platinum supply to grow by 1.9 per cent to 6.06 million ounces

Global platinum supplies are forecast to climb by 110,000 oz to a total of 6.06 million ounces. In South Africa, a mixture of safety issues, shaft closures and industrial unrest have led to a reduction in tonnes of ore milled by the industry. However, the sale of additional metal from refined stocks means that South African supplies will rise by 210,000 oz in 2009 to 4.73 million ounces. Platinum supplies from North America and Russia are set to fall to 255,000 oz and 745,000 oz respectively.

Autocatalyst platinum demand to fall by a third to 2.48 million ounces

Gross autocatalyst platinum demand is forecast to decline by 33.0 per cent to roughly 2.48 million ounces in 2009. European autocatalyst demand for platinum is expected to fall by 45.7 per cent, or 900,000 oz, to 1.07 million ounces. The effect on demand of a sharp reduction in vehicle production has been exacerbated by a short term decline in the market share of diesel passenger cars. Demand will fall in Japan, North America and the Rest of the World region reflecting a fall in vehicle production volumes in each area. Chinese platinum autocatalyst demand will rise due to a strong performance by the automotive sector there.

Net jewellery demand to rise by almost 80 per cent to an annual 2.45 million ounces due to record levels of Chinese purchasing

The lower platinum price has reignited demand in the Chinese jewellery sector, encouraging the industry to replenish and further build its stocks, particularly in the first half of 2009. Improved profit margins have attracted new manufacturers and retailers into platinum jewellery while a lower retail price has driven consumer purchases higher. As a result, demand in China is forecast to leap by 900,000 oz to a record 1.75 million ounces in 2009. Net Japanese jewellery industry demand for platinum has risen as the fall in the platinum price has depressed recycling volumes from second hand jewellery. Demand from European and U.S. jewellers has declined due to the impact of the recession on consumer sales.

Platinum expected to trade between $1,280 and $1,550 during the next six months

2010 will bring some recovery in automotive and industrial demand for platinum as the world economy improves, but supplies are not likely to grow to the same extent and the market could move into a modest deficit. These positive fundamentals will support the platinum price. Much of the price rise over the last twelve months has been driven by a weak Dollar, a strong gold price and by growing investor interest and if these trends continue the price may trade as high as $1,550 during the next six months. However, if the Dollar strengthens, or the price of gold falls, then the platinum price could fall as low as $1,280 during the same period.

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