‘Small deficit’ for platinum this year?

Global – ‘Last year, autocatalyst scrap recycling recorded its second biggest drop in the case of platinum and its single biggest decline for palladium since the start of our series in 1999,’ notes the team at Thompson Reuters in its annual GFMS Platinum Group Survey 2016.

Platinum consumption in autocatalyst applications rose by 2% to 93.7 tonnes last year, according to the report. But autocatalyst scrap declined by 14%, giving up the gains of the previous two years to fall to 29 tonnes. ‘Lower steel and PGM (platinum group metal) prices impeded the flow of scrap down the supply chain,’ GFMS explains.

In 2015, it points out, platinum prices posted their largest single annual drop since 2009, declining by 24% to an average of US$ 1053 per oz. Palladium prices averaged US$ 692 per oz last year, which was 14% lower than in 2014. And rhodium prices recorded an average of US$ 955 per oz last year – a 19% decline from 2014.

GFMS forecasts that the platinum market will return to a ‘small physical deficit’ this year while palladium’s shortfall is projected to deepen in 2016. Particularly in the case of platinum, this will be driven by lower mine supply. ‘The extreme pricing action of commodities over the past six months highlights the extent to which macroeconomic factors are driving trading behaviour,’ GFMS notes.

It therefore expects ‘extremely gradual’ US monetary tightening to help pave the way for higher prices in 2016, especially for palladium. Prices for palladium and platinum are forecast to average, respectively, US$ 595 and US$ 1005 per oz this year.