PGMs Analysis and Forecast Report Q2 2015

Otmane El Rhazi from The Bullion Desk.

Overview of the PGMs Market in Q2 2015

Each Quarter FastMarkets and Sucden Financial produce an analysis and forecast report on the Precious and Base Metals. Below is the PGM’s report, to read the full report covering all the metals in pdf form click here.

Subscribers to FastMarkets Professional have access to the report before it is published here.

PGMs – Dollar strength tests investor confidence

Summary

Solid growth in global vehicle sales continues to support robust PGM demand expectations but persistent dollar strength has undermined investor confidence and will drag on prices, we feel. The threat of supply disruptions remains but SA mine supplies are expected to be far stronger. Russian central bank sales will act as a price drag.

Platinum Chart

Palladium Chart

Overall trend – Sentiment in both platinum and palladium weakened significantly across the first quarter – failure to move above overhead chart resistance at $1,250 per ounce in platinum and $850 in palladium has triggered stale liquidation from Nymex speculators and ETF investors. Given the weakness already seen and the strength in auto sales as well as platinum’s discount to gold, prices may have overshot on the downside, we feel – our forecast ranges for the second quarter are $1,100-1,250 for platinum and $750-850 for palladium.

Supply looking stronger – We maintain that platinum and palladium will remain in fundamental deficits in 2015 given the growth in autocatalyst-related demand. Yet developments indicate the market will remain amply supplied. Above-ground platinum stocks were at 2.8 million ounces at the end of 2014, the World Platinum Investment Council estimates, despite their being heavily drawn on because of prolonged industrial action by South African miners. The Russian central bank’s decision “in principle” to liquidate some of its palladium stocks could also alleviate apparent tightness. Meanwhile, the longer-term outlook for platinum has become somewhat clouded while South African producers look to dispose of high-cost mines while diesel-powered cars sales face increasing headwinds over environmental/health concerns.

Investor ETF exposure weakened early in 2015, reflecting stale liquidation among more speculative investors in the US and Europe. The threat of further disinvestment will remain a drag although South African investors showed dip-buying interest late in March.

Globally vehicle sales remain on an upward trajectory. Accumulated sales in China, the US and EU stood up 6.2 percent on January-February 2014, which together with tighter emission controls will continue to support robust PGM demand from the autocatalyst sector.

 

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