Eastern Platinum Ltd (ELR)

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Platinum is in short supply

2009-08-21 15:00:00

Leading market analysts feel that global platinum supplies fell heavily to 5.97-million ounces and net demand for platinum decreased by 5%, to 6.35- million ounces, as a number of sectors were affected by the economic slowdown.

Supply disruptions drove the price to a record $2,276/oz in March 2008 before investor sales forced it sharply down later in the year, to a low of $756/oz in October 2008.

Global supplies of platinum decreased by 9.5%, in 2008, to 5.97-million ounces.

South African sales of platinum decreased to 4.53-million ounces, driven lower by a combination of bad weather, geological issues, safety closures, smelter problems and a shortage of skilled staff.

Russian platinum supplies fell to 820,000 oz, while sales of metal from other producing nations were marginally up at 295 000 oz.

Gross autocatalyst demand for platinum fell by 8.2%, to 3.81-million ounces, in 2008.

European auto makers bought less platinum for use in catalytic converters than they bought in 2007 owing to lower light-duty vehicle production, despite the greater use of platinum-containing diesel particulate filters.

Platinum use in other regions fell, reflecting lower vehicle output and continuing efforts to replace any remaining platinum in gasoline catalyst formulations with palladium.

Net physical investment demand for platinum grew strongly, from 170,000 oz, in 2007, to 425,000 oz, in 2008.

Purchasing of the metal through exchange-traded funds (ETFs) was volatile, with heavy buying in early 2008 and heavy selling later in the year.

The fall in the platinum price in the final months of the year was met by strong buying interest from Japanese investors, which accounted for the year-on-year increase.

Jewellery demand, net of recycling, declined by 6.2%, to 1.37-million ounces, in 2008. Manufacturing volumes and retail sales were depressed by the high metal prices in the first half of the year in every region, but recovered later in China and Japan once the platinum price declined. Recycling volumes were very large in Asia earlier in the year, but decreased sharply in response to the price change.

Demand for platinum for industrial applications fell by 4.9%, to 1.76-million ounces, in 2008. The buying of the metal fell in the chemicals and electrical sectors as the global economy slowed in the second half of the year, but more metal was bought by the petroleum refining industry. The glass sector demand fell owing to the closure of a number of conventional television glass factories.

http://www.commodityonline.com/news/Platinum-is-in-short-supply-20557-3-1.html