Platinum market expected to be balanced in 2016

Global – Automotive demand for platinum is expected to reach 3.315 million oz next year for an increase of 2% over 2015, according to the World Platinum Investment Council (WPIC). Meanwhile, jewellery sales, industrial end uses and investment demand are expected to deliver ‘€˜modest’€™ growth in 2016.

Total mining supply is thought likely to achieve year-on-year growth of 4% in 2016, with global refined supply increasing 2% year on year to 5.965 million oz. ‘The outlook is for the market to move to balance in 2016,’ WPIC states.

The organisation reports that the third quarter of 2015 was ‘dominated by the Volkswagen emissions revelations’. And yet it adds: ‘While many commentators postulated that the scandal would inevitably mean a reduction in platinum demand, corresponding to fewer diesel cars, we do not agree. We believe the consequences could include automaker, regulator and consumer actions that are as likely to lead to increases in automotive uses of platinum in the coming months and years.’

Automotive demand was up 6% year on year in the third quarter of 2015, primarily due to increased platinum usage in light and heavy-duty autocatalysts, research by SFA Oxford reveals. It also reports that an estimated platinum deficit of 320 000 oz in the same quarter followed a 20 000 oz shortfall in the preceding three months. This presents a ‘stark contrast’ to the 240 000 oz surplus in the third quarter of 2014.

Total platinum supply in 2015 is expected to grow by 6% to 7.73 million oz, with recovery from the 2014 strikes in South Africa more than offsetting a 7% decline in recycled platinum owing to lower jewellery demand in China and weaker platinum group metal prices.

Overall demand, meanwhile, is forecast to expand slightly to 8.03 million oz as ‘stronger’ automotive, industrial and investment demand more than offsets a drop in jewellery offtake.