The platinum market moved from a deficit of 220,000 oz in 2008 into a surplus of 285,000 oz in 2009, according to Johnson Matthey in 'PLATINUM 2010', released today. Gross demand for platinum fell by 11.9 per cent to 7.04 million ounces. Recovery of platinum from autocatalyst, electronic and jewellery scrap decreased by 23.2 per cent to 1.405 million ounces. As a result, demand for platinum net of recycling fell by 8.5 per cent to 5.635 million ounces. Supplies of platinum from current mining operations fell by 0.3 per cent to 5.92 million ounces.

SUPPLIES OF PLATINUM IN 2009 ONLY MARGINALLY BELOW 2008 LEVEL
South African supplies of platinum rose by 0.3 per cent to 4.53 million ounces, with increased output from newer mines and the sale of metal from stocks accumulated in 2008 offsetting losses from the closing of some uneconomic production. North American supplies, hit by industrial action, fell to 260,000 oz and Russian supplies fell slightly to 785,000 oz. Expansion at Zimbabwe platinum mines led to output increasing by 27.8 per cent to 230,000 oz.

AUTOCATALYST DEMAND CUT BY LOW VEHICLE OUTPUT AND SLUMP IN DIESEL SHARE
Gross demand for platinum in autocatalysts dropped by 39.0 per cent to 2.23 million ounces in 2009 as global vehicle production fell heavily in nearly all regions. Gross European demand dropped by over half to 970,000 oz due to a sharp, short-term decline in the market share of diesel cars. Recovery of platinum from spent autocatalysts was also sharply down last year, falling by 26.5 per cent to 830,000 oz due to a decline in the number of vehicles scrapped.

INDUSTRIAL DEMAND FOR PLATINUM REDUCED AS RECESSION BITES
The economic downturn hit industrial demand for platinum in almost all applications as industrial plants operated well below capacity, product inventories were reduced and capital investment was delayed. The glass industry sold a large amount of platinum after closing redundant cathode ray tube glass factories in China. Although medical and biomedical demand for platinum was flat, total industrial purchases of platinum were 33.7 per cent lower at 1.14 million ounces.

RECORD DEMAND FOR PLATINUM FOR JEWELLERY MANUFACTURE IN CHINA
Gross purchases of platinum for jewellery manufacture climbed by 46.1 per cent in 2009 to 3.01 million ounces worldwide. The reduced value of platinum led to a fall in recycling of scrap jewellery by 18.7 per cent to 565,000 oz, resulting in net global demand of 2.445 million ounces, a rise of 79.1 per cent. In China, the booming economy and a lower average platinum price than in 2008 boosted gross demand to a record 2.08 million ounces. The rebuilding of stocks of metal and finished jewellery throughout the trade contributed to the increase.

EXCHANGE TRADED FUNDS SUBSTANTIALLY BOLSTER INVESTMENT DEMAND
Identifiable physical investment demand for platinum increased by 18.9 per cent in 2009 to 660,000 oz. Although in Japan purchasing of large bars was weaker than in 2008, total holdings of metal within the European Exchange Traded Funds (ETFs) rose substantially following their decline in the second half of the previous year.

POSITIVE PRICE OUTLOOK STEMS FROM INDUSTRIAL RECOVERY AND INVESTOR INTEREST
Johnson Matthey expects the platinum market to be close to balance in 2010 as rising demand outpaces a steadier growth in mine supplies. Concerns remain over global economic recovery and the sustainability of Chinese economic growth, while sovereign debt issues also continue to apply some downward pressure to the platinum price. Investment activity is a major factor in the platinum market, with net long speculative futures positions at high levels and total ETF holdings becoming even more substantial since the launch of the US ETF early in 2010. If interest rates remain low and the gold price stays at its current elevated levels, net investment in platinum may well continue to grow and help to sustain the price at between $1,600 and $2,000 per ounce during the next six months.

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