Palladium market to swing into 915,000 oz deficit in 2012: forecast
London (Platts)--13Nov2012/557 am EST/1057 GMT
The balance of the palladium market will swing this year from surplus to
a deficit of 915,000 oz deficit due to lower supplies, higher gross demand
and less recycling, specialist chemicals company Johnson Matthey said in the
Platinum 2012 Interim Review Tuesday.
Johnson Matthey is forecasting an average price of $650/oz over the next
six months, with a price range of $550-750/oz.
"Supplies will contract mainly because of lower sales of Russian state
stocks, forecast to drop by over 500,000 oz compared with last year, to
250,000 oz, while recycling will be constrained by subdued PGM prices. Gross
palladium demand is predicted to rise to 9.73 million oz, driven by a return
to positive net physical investment and higher autocatalyst purchasing," the
Supplies of palladium are predicted to decline to a nine-year low of
6.57 million oz. Palladium supplies from South Africa are forecast to fall by
6% this year, to 2.40 million oz, in line with lower underlying platinum
output. Newly refined palladium supplies from Russia are expected to decrease
due to a change in the ore mix and falling average grades.
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Supplies of palladium are expected to fall in 2013 as a result of lower
output from Russia and the "diminishing likelihood of a significant increase
in output from South Africa. Another year of solid autocatalyst and
industrial demand is forecast, together with higher returns of palladium from
end-of-life vehicle recycling."
AUTO MARKET SET TO GROW BY 7%
Purchasing of palladium by the autocatalyst sector is expected to rise
by 7% to a new high of 6.48 million oz. "Demand for palladium is forecast to
benefit from growth in global vehicle production, with the strongest
performance in the principally gasoline markets of Japan and the USA, as well
as continuing substitution of platinum in both light and heavy duty diesel
aftertreatment formulations," Matthey said.
Palladium is a key ingredient in gasoline driven engine catalysts.
Industrial demand for palladium is forecast to soften by 3% to 2.41
million oz. "In electrical applications, a long-term trend towards using
cheaper base metal alternatives to palladium in all but niche and high-end
applications continues to drive demand lower. However, a wave of chemical
plant construction in China will stimulate purchasing of palladium for new
catalyst charges," the company added.
This year is set to mark the return to positive physical palladium
investment demand, in contrast with the net liquidation seen in 2011.
"For the year as a whole, a change in investor sentiment towards
palladium ETFs is expected to result in 385,000 oz of net new physical
investment demand, a swing of 950,000 oz compared with last year," the report
--Ben Kilbey, firstname.lastname@example.org
--Edited by Robert DiNardo, email@example.com