Platinum prices are forecasted to decline in 2015 as mining production outpaces demand, according to CPM’s annual Platinum Yearbook released on Tuesday.
After rising to over $1,700 an ounce in 2011, platinum prices have steadily fallen to a 2015 forecast of $1,180.91 per ounce, the group stated.
“After rising during the first three weeks of 2015, platinum prices were in a downward trend for most of the first quarter,” CPM said.
Total platinum global demand for 2015 is predicted to rise three percent to 6,180,000 ounces from 5,998,000 ounces in 2014. Electronics are expected to see the biggest gain, increasing 18.8 percent from the previous year to 309,000 ounces as heavy end-users of platinum like mobile phones and laptops increase in popularity.
Commercial vehicle demand – automobiles that use extensive amount of platinum in the diesel engines – is up 13.3 percent in the first quarter of 2015 from the previous year. Total global vehicle platinum demand is expected to increase 2.6 percent to 3,219,000 ounces in 2015.
European platinum demand is forecasted to rise to 1.15 million ounces during 2015 – the highest since 2011 – as demand for commercial and passenger vehicles increases and tighter emission standards are enacted.
“Demand for commercial vehicles is closely linked with economic activity,” CPM said. “There is an improvement in sentiment within Europe about medium to long term economic growth, which should encourage businesses to invest in commercial vehicles, especially given the lackluster demand from this sector post the Great Recession.”
Platinum jewelry demand should get a boost in 2015 as the silver metal has moved into a discount to the price of gold. Toal demand for jewelry is forecast at 2,460,000 ounces, up 1.9 percent from the previous year.
Turning to supply, global mine production is expected to reach 5,752,000 ounces in 2015, a 19.9 percent rise from the previous year and the highest since 2013. Total refined platinum supply is estimated to increase 15.3 percent to nearly 7,000,000 ounces.
The lack of disruption in South Africa’s mining industry after a labour strike in 2014 is the main reason for growth along with rising output in Canada.
“In 2015, South Africa’s platinum mining industry is unlikely to be threatened with a labor strike of the scale seen in 2014,” CPM noted. “Platinum mine production is expected to grow at a healthy rate in Zimbabwe and Canada.”
However, secondary supply of platinum is expected to decline due to lower supplies of auto catalyst scrap, which could offset some of the growth in mining, the report countered.
Palladium prices are expected to gain 2.9 percent to an average of $781.66 in 2015. Bolstered by fabrication demand that is expected to reach 9,140,000 ounces, a 1.3 percent increase.
“Palladium’s price performance during 2015 is not expected to be nearly as stellar as seen over the past couple of years,” CPM said. “Even as the fundamentals for the market are still supportive of prices, most of the positive fundamentals are already factored into the price of the metal, preventing a strong move higher.”
(Editing by Tom Jennemann)
The post Platinum prices to consolidate in 2015 as mining production rises -CPM GROUP appeared first on The Bullion Desk.
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