LONDON (Commodity Online): Platinum surplus which witnessed a sharp growth in 2010 at one million ounces is expected to witness another sizeable gross surplus in 2011, according to an analysis by GFMS Ltd. The surplus growth will take place partly as mine output is set to rise, due mainly to forecast gains in North America, and both jewellery and autocatalyst scrap are also forecast to increase, GFMS report said.
Palladium which witnessed a return to large gross deficit estimated at 550,000 ounces in 2010 will witness an increase in prices to $975 before the year is out, GMFS report said. Growth in auto-catalyst demand to a 10-year high in 2010 on rebounding car sales and demand from electronics industry helped support palladium prices.
GFMS expects palladium to witness another large gross deficit in 2011 with ongoing gains for autocatalyst demand projected to broadly counter a marked rise in North American mine output and further gains for autocatalyst scrap. Investment in Exchange Traded Funds (ETFs) should also remain significant, although well short of 2010’s volumes. Sales from Russian government reserves should again feature in 2011, Martin Szczypka, Senior GFMS analyst said.
Platinum demand should also grow but only modestly as supply chain disruption in Japan after the Fukushima disaster, still sluggish European diesel sales and the effect of substitution inhibits platinum demand for autocatalysts, and as the price constrains jewellery demand. Despite that, Martin Szczypka noted, “higher investment on the back of a supportive macroeconomic environment and record gold prices, coupled with a rising threat of industrial action against the South African mining sector should push platinum comfortably north of $1,900 by year end”.
