Our market

Supply & demand

Our markets

Global GDP growth for 2012 was just over 3% but with a wide geographic dispersion. The US market grew at around 2% for the year and this has strengthened marginally into 2013, while China’s growth rate of about 7.8% is expected to contract this year. Europe remains firmly in the grip of recession as austerity programmes constrain any prospects of growth. At the time of writing, however, very tentative signs of stability and recovery are beginning to emerge. The European Union and indeed the euro have managed to survive the economic turmoil, but much more is required to stimulate this economy.

Japan has adopted its own version of quantitative easing with the yen depreciating nearly 20%, thereby boosting export focused industries such as automotive and electronic. Despite this seemingly good news, world growth remains fragile and tentative and further shocks can by no means be ruled out.

Against this backdrop of global uncertainty, investor sentiment towards the PGMs and commodities in general remain weak, and the ample availability of physical metal negatively impacted the prices of our metals.

Markets performance

Significant labour disruptions compounded by government-led safety stoppages resulted in the loss of some 600 000 ounces of platinum production during 2012 to a level not seen for a decade or more. Perversely this allowed the removal of some of the excess above-ground inventory from the market, but even this could not impact on pricing, highlighting the extent of inventories.

The growing automotive industry continues to underpin demand for our metals, notwithstanding the geographic diversity of this growth. China and the US – both gasoline dominated markets – continue to perform well and are driving global growth, but European sales continue to disappoint and are hovering at multi-year lows. With Europe’s significant diesel share this is having an impact on platinum demand. Remaining elusive is the emergence of cleaner diesel in China, which will allow the fitment of catalytic devices to the world’s largest heavy-duty diesel fleet in order to alleviate the pollution problem being experienced in that country.

Light-duty vehicle sales        
Units: Millions   2011   2012   (Forecast) 
2013  
  North America   13.1   15.4   16.1  
  Western Europe   14.0   12.7   12.1  
  China   17.1   18.2   20.3  
  Japan   8.1   9.5   9.2  
  Rest of the world   24.3   25.7  25.6  
    76.6   81.5   83.3  

 

Platinum jewellery demand remains resilient in the lower price environment, and is further supported by the extension of China’s retailers into third and fourth tier cities which have until now not had significant access to this metal. Gold’s premium over platinum during parts of the last year also stimulated some substitution away from white gold. Trade on the Shanghai Gold Exchange during the first half of 2013 has been significantly above that for 2012, but we believe a greater industrial bias is emerging from this source.