HSBC has downgraded its annual platinum price forecast due to the poor investment climate, it said.
The bank now sees the metal averaging $1,237 per ounce in 2015, it said in a note on Wednesday. Platinum recently fell below the $1,100 level for the first time in six years in March from its peak this year $1,288 in January.
Although the metal has compelling fundamentals, it faces “a challenging macroeconomic environment which has undermined prices this year”, HSBC’s James Steel said.
This indicates long-running structural deficits, he added. The price reflects the fact that above-ground stocks are much larger than generally expected, though there is no verifiable data to support this.
Low lease rates support the view that there appears to be no immediate shortage of stocks.
But stocks are gradually eroding, which supports the bank’s view that there will be a rally in the long term – the bank left its 2016 forecast of $1,510 and 2017 forecast of $1,600 unchanged.
On the demand side, the slowing economy and overall decline in luxury goods demand in China is hurting platinum, it said.
“China is the world’s largest consumer of platinum jewellery, accounting for nearly 70 percent of global consumption. A marginal change in China’s appetite for platinum, therefore, exerts the greatest influence on global platinum jewellery consumption,” Steel said.
Chinese imports in February were down 35 percent on the same month of last year at a net eight tonnes. Still, Steel expects a recovery in jewellery demand later this year based in part on platinum’s price discount to gold.
On the auto demand side, HSBC expects the world’s biggest diesel engine consumer- Europe – to lift production 1.8 percent to 13.4 million vehicles this year although it lowered its forecast for global auto production to 87.4 million vehicles from 87.7 million previously.
On supply, Steel expects production to increase this year following the South African strike-affected numbers from 2014.
Despite news recently from Statistics South Africa that there was a 41-percent month-on-month decline in PGM production in January in the country, HSBC says that mining appears to have made a moderately positive start this year.
“The comparisons are skewed by maintenance at Amplats’ and Lonmin’s processing facilities in January 2015 and buoyant levels in January 2014 as material was quickly processed ahead of strike action last year,” Steel said. “We expect production to recover and stabilize from last year,” he added.
But production may be hit later in the year if electricity supply tightens in the second quarter into the country’s winter months.
South African power producer Eskom recently warned of rolling blackouts because there is not enough electricity to meet demand.
(Editing by Mark Shaw)
The post HSBC lowers FY platinum price forecast to $1,237/oz appeared first on The Bullion Desk.
No comments:
Post a Comment