The World Platinum Investment Council (WPIC) has significantly lowered its estimate for platinum’s full-year global deficit in 2015 because of softer industrial demand in China, it said.
The WPIC, which was formed in 2014, revised its predicted deficit for this year to 190,000 ounces from 235,000 ounces, it said in a quarterly report. This is also 72 percent below its estimated 2014 shortfall of 670,000 ounces.
The figure is much lower than many analysts’ estimates – UBS, for example, sees the market in a 744,000-ounce deficit in 2015 while GFMS pegs it at 670,000 ounces.
Although WPIC sees industrial demand rising five percent this year to 1.645 million ounces, it sees industrial demand in China growing at a slower rate.
And although Beijing has dropped its GDP growth target to its lowest in more than two decades at around seven percent and so far this year, data released in recent weeks suggests that the country may even struggle to reach this objective.
On the demand side, the WPIC sees overall demand rising three percent to 8.155 million tonnes – jewellery demand will increase three percent to 3.085 million ounces while automotive demand will rise four percent to 3.375 million ounces, it predicted. But investment demand will drop 63 percent to 50,000 ounces.
On the supply side, its production forecast of 5.765 million ounces, a year-on-year increase of 18 percent, reflects the normalisation of production in South Africa, which was hit by a five-month strike at the start of 2014.
South African production will rise an estimated 30 percent in 2015 to 4.06 million ounces, lifting total global supply by 10 percent to 7.965 million ounces, the WPIC said. Recycling will climb three percent to 2.11 million ounces.
In the first quarter, the market was in an estimated shortfall of 160,000 ounces. Supply at 1.835 million ounces was slightly lower than in the previous quarter, though the increase in demand to 1.995 million ounces offset the reduction.
More importantly, particularly with the platinum industry meeting this week in London, the WPIC estimates that above-ground stocks in the first quarter of this year were 2.64 million ounces. It sees above-ground metal at 2.61 million ounces over the full year, down seven percent on the 2014 total.
With the market having been in deficit for some time, the lack of price upside has been attributed to above-ground stocks. Even at the heights of last year’s five-month strike that skewed annual production figures, platinum peaked at just $1,520 per ounce – it had started the year at $1,371 and closed it 12 percent lower at $1,206.
(Editing by Mark Shaw)
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