Platinum is in short supply
2009-08-21 15:00:00

LONDON (Commodity Online): If experts are to be believed, global platinum market is in deficit by around 375000 oz in 2008.

Leadingmarket analysts feel that global platinum supplies fell heavily to5.97-million ounces and net demand for platinum decreased by 5%, to6.35- million ounces, as a number of sectors were affected by theeconomic slowdown.

Supply disruptions drove the price to arecord $2,276/oz in March 2008 before investor sales forced it sharplydown later in the year, to a low of $756/oz in October 2008.

Global supplies of platinum decreased by 9.5%, in 2008, to 5.97-million ounces.

SouthAfrican sales of platinum decreased to 4.53-million ounces, drivenlower by a combination of bad weather, geological issues, safetyclosures, smelter problems and a shortage of skilled staff.

Russianplatinum supplies fell to 820,000 oz, while sales of metal from otherproducing nations were marginally up at 295 000 oz.

Gross autocatalyst demand for platinum fell by 8.2%, to 3.81-million ounces, in 2008.

Europeanauto makers bought less platinum for use in catalytic converters thanthey bought in 2007 owing to lower light-duty vehicle production,despite the greater use of platinum-containing diesel particulatefilters.

Platinum use in other regions fell, reflecting lowervehicle output and continuing efforts to replace any remaining platinumin gasoline catalyst formulations with palladium.

Net physical investment demand for platinum grew strongly, from 170,000 oz, in 2007, to 425,000 oz, in 2008.

Purchasingof the metal through exchange-traded funds (ETFs) was volatile, withheavy buying in early 2008 and heavy selling later in the year.

Thefall in the platinum price in the final months of the year was met bystrong buying interest from Japanese investors, which accounted for theyear-on-year increase.

Jewellery demand, net of recycling,declined by 6.2%, to 1.37-million ounces, in 2008. Manufacturingvolumes and retail sales were depressed by the high metal prices in thefirst half of the year in every region, but recovered later in Chinaand Japan once the platinum price declined. Recycling volumes were verylarge in Asia earlier in the year, but decreased sharply in response tothe price change.

Demand for platinum for industrialapplications fell by 4.9%, to 1.76-million ounces, in 2008. The buyingof the metal fell in the chemicals and electrical sectors as the globaleconomy slowed in the second half of the year, but more metal wasbought by the petroleum refining industry. The glass sector demand fellowing to the closure of a number of conventional television glassfactories.