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Johnson Matthey has revealed that it expects platinum to trade between $950 per oz and $1,350 per oz over the course of 2009. In its 'Platinum 2009' market review, the world's leading refiner and distributor of the precious metal confirmed that global demand dropped by five per cent to 6.35 million ounces in 2008.

Although demand has been particularly poor in the automotive and industrial sectors, the company also noted that strong jewellery purchases in China so far this year have offset the trend.

As a result, Johnson Matthey has predicted that supply and demand will be "more closely matched" in 2009 than last year and that the platinum price will be "much less volatile".

"Any improvement in the economic environment could help drive platinum as high as $1,350 within the next six months," read one section of the report.

"In any case, platinum should derive good support from physical buying in Asia and from its strong longer-term fundamentals and is expected to trade above $950 during the same period."

According to the company's figures, the platinum market was in deficit by 375,000 oz last year, largely due to gross autocatalyst demand decreasing by 8.2 per cent to 3.81 million ounces.

Despite an increasing number of diesel cars incorporating platinum-based particulate filters, European automakers purchased less of the metal for catalytic converters due to falling light duty vehicle output.

Furthermore, auto production levels have been dwindling in North America, while manufacturers are attempting to replace platinum with palladium in gasoline catalyst formulations.

Johnson Matthey has also revealed that global supplies of platinum declined by 630,000 oz to 5.97 million ounces in 2008, largely as a result of lower production at South African mines.

Sales of the metal from the country dropped by 540,000 oz to 4.53 million ounces after the Eskom power crisis, bad weather, smelter and mine shutdowns, and worker shortages all affected output.

In addition, platinum supplies in Russia slipped by 95,000 oz to 820,000 oz, although sales increased slightly in several other nations with more minor production levels.

Turning to jewellery, the company noted that manufacturing was subdued in the early part of 2008 but recovered strongly towards the end of the year - particularly in Japan and China - as platinum prices fell.

Annual net demand was "much stronger than previously expected", only decreasing by 6.2 per cent to 1.37 million ounces, while net global physical investment demand surged by 150 per cent to 425,000 oz.

Courtesy: Platinum Today

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