Chinese PGM imports showing signs of improved demand – BarCap

Otmane El Rhazi from The Bullion Desk.

Chinese platinum and palladium consumption is starting to show signs of improvement following a rise in imports last month, Barclays Capital.

Platinum imports at 297,980 ounces were 26 percent year-on-year and more than treble the previous month’s total on improved Chinese appetite, the broker said in a note on Thursday.

“Not only were platinum imports the strongest since December 2013 in March but buying on the Shanghai Gold Exchange has become more price responsive. Price dips have attracted increased interest, implying that prices could be nearing better support on the downside,” BarCap said.

Last month, spot platinum dropped below $1,100 to a July 2009 low under renewed pressure from the strong US dollar and poor Chinese demand. It was last at $1,129/1,134 per ounce, up $1 on Wednesday’s close.

Platinum prices are down six percent in the year to date in dollar terms and down five percent in yuan terms.

Still, imports were down 14 percent for the first quarter of 2015; imports into China and Hong Kong for the year to February were down 38 percent year-on-year.

China’s jewellery sector has been weak, failing to provide sustained support to platinum prices on the downside, while softer Chinese data has pressured palladium prices lower.

The bank forecast China’s platinum consumption to account for 29 percent of global consumption, while its jewellery demand will account for two-thirds of global platinum jewellery demand in 2015.

Meanwhile, China’s palladium demand will make up 22 percent of global palladium demand in 2015 and a similar share of global of palladium auto-catalyst demand, it predicted.

Alongside the rest of the precious metals complex, palladium has also come under consistent downward pressure but it has held up better than platinum. It was last at $755/760 per ounce, also $1 higher.

Palladium imports at 71,800 ounces in March were the highest since August 2014. Imports were down seven percent year-on-year but more than double the February 2015 total. For the first quarter, palladium imports were down 26 percent year-on-year.

China’s auto sales were up 3.3 percent year-on-year in March and were four percent higher year-on-year in first quarter of 2015.

BarCap sees China’s vehicle production growing at eight percent year-on-year and sales rising 8.9 percent.

(Editing by Mark Shaw)

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