WPIC: Platinum Market To Be Roughly Balanced In 2018
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(Kitco News) - Globalsupply and demand for platinum will be closely matched in 2018, with a smallsurplus of 25,000 ounces basically returning the market to equilibrium, theWorld Platinum Investment Council predicted on Thursday.
Thiswould be one-tenth of the 250,000-ounce surplus that the organization reportedfor 2017. Last year’s surplus came about after higher-than-expected supply fromSouth Africa and a jump in recycling in the fourth quarter, while global demandfell 7% year-on-year as a result of less buying from all major market segments,the WPIC said.
For2018, the supply is projected to be around 7,815,000 ounces globally, a declineof 2% from 2017, despite an anticipated increase in recycling of 60,000 ounces,the organization said. Total mining supply is expected to fall 4% to 5,850,000ounces mostly due to South Africa mine closures and also lower output inRussia.
Meanwhile,the WPIC sees global demand growing marginally to 7,790,000 ounces as arecovery in industrial demand and an increase in jewelry demand outweigh adecline in automotive demand and slightly lower investment demand.
“While2017 was a challenging year for platinum, early indications show signs of amarket that is moving in the right direction in 2018,” said Paul Wilson, chiefexecutive officer of the WPIC. “Supply is tightening and demand remainsresilient. These promising fundamentals, paired with elevated globaluncertainty and a better economic growth outlook, mean macro conditions arebecoming increasingly helpful to the platinum market.”
Thereport emphasized the importance of China to the platinum market.
“Thefinal quarter of 2017 has shown welcome, albeit tentative, signs that jewelrydemand in the country is improving,” Wilson said. “We expect this trend tocontinue through 2018, with ongoing strength across other regions.”
Meanwhile,Wilson suggested that concerns about automotive demand may be “overdone.” Platinumgroup metals are used for catalytic converters.
“Thepolicy environment for diesel vehicles remains in flux, especially in Europe,”Wilson said. “Nevertheless, our broad perspective, including the environmentalneed to reduce CO2 emissions, significant hurdles to mass battery electricvehicle adoption, and automakers already able to genuinely clean up diesel NOxemissions, means we firmly believe clean diesel vehicles will be on the roadfor years to come.”
Automotivedemand for platinum fell 3% in 2017, due primarily to falling demand in WesternEurope, the report said.
Globaljewelry demand slipped 2% to 2,460,000 ounces as other regions struggled tooffset a decline in China, according to the WPIC. Total investment demand wasalso lower in 2017 at 260,000, due primarily to a decrease in Japanese barbuying. However, exchange-traded-fund holdings rebounded by 95,000 ounces in2017 after two years of declines, the report said.
By Allen SykoraFor Kitco News
Follow @AllenSykora
asykora@kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.