Karen Harverson
THE platinum market, although sensitive to sudden increases in supply, is unlikely to be hit too hard when the United States sells off its strategic stockpile of platinum as announced in September 1994.
“The US has not yet decided how much of its 453 000oz of platinum will be sold off or when but it is unlikely to be released into the market all at once,” said Johnson Matthey marketing general manager Jeremy Coombes, speaking at the 1995 interim review of the platinum industry.
Coombes reported that platinum demand is expected to reach a new high this year, increasing four percent to 4,7-million oz compared with 1994. “Much of the increase is from the industrial sector, particularly the chemical, petroleum refining, and glass fibre industry as well as from high-technology industries.”
The jewellery market — led by Japan — has moved from second place to first as the biggest consumer of platinum with 1,8-million oz consumed in 1995 compared to 1,73-million oz last year.
Growth in the autocatalyst market — the biggest consumer last year — has declined from 1,87-million oz in 1994 to 1,79-million oz this year, largely as a result of the switch to palladium autocatalysts by European manufacturers.
European manufacturers are adopting palladium rich autocatalyst systems in gasoline vehicles as it offers high temperature resistance, said Coombes.
He added that on diesel cars — which make up 25 percent of new cars in Europe — there was wider use of platinum autocatalysts which would improve demand. He reported further increased demand for platinum autocatalysts from South East Asia.
Demand for platinum investment products is expected to fall by 30 000oz to 365 000oz in 1995 despite increased interest by Japan. European investment has declined as a result of Austria joining the European Union in January. Purchases of platinum coins in Austria formerly attracted no tax but with joining the European Union (EU), value added tax has now been imposed and demand has fallen.
In the US, stronger equity and bond markets have diverted investor attention away from platinum coins.
Platinum supply is expected to increase by eight percent in 1995 to reach 4,89-million ounces as a result of higher shipments from South Africa — the world’s biggest supplier of platinum — as well as an increase in Russian supplies which surged 190 000oz on last year’s figure of 1,01-million oz.
“In our opinion, Russian sales are not equal to production and we expect at least 500 000oz to be drawn from state reserves,” says Coombes.
On South African supplies, he said the rise in production to 3,35-million ounces was still below 1993 levels (3,36-million) but represented an increase of 190 000oz on last year’s figure.
“Additional metal is available from Amplats which is processing the concentrate backlog which occurred due to the reconstruction of its smelter.”
Coombes said Implats’ production had declined slightly as a result of an accident at the smelter in August this year and he added that he did not expect the merger between Implats and Lonrho Platinum division to affect overall platinum production.
The price of platinum is expected to range between $400 and $440 an ounce during the next six months. It reached $460 in April this year but fell to below $420 in early October.