Supply & demand

Platinum

The platinum market again found itself in balance in 2006 with strong growth in the automotive sector once again more than compensating for further weaknesses in jewellery demand. As a result of this shift, a far greater share of platinum demand is being classified as non-elastic. Industrial demand grew at a healthy 9% spurred by increases in glass and IT applications. Primary supply growth, essentially from South Africa, was just sufficient to prevent the market returning to deficit.

Automotive demand

Further penetration of diesels into the light duty sector and increased fitment of catalyst systems into heavy duty diesels were the main contributors to platinum growth of nearly 14% in this sector. High gasoline prices resulted in a continued shift from large SUV’s and pick-up trucks to more fuel efficient diesel vehicles. In Europe, the voluntary fitment of particulate filters to ensure early compliance with emission legislation continued. Chinese vehicles are now compliant with Euro III regulations and will adopt Euro IV for 2010 by which time this market is expected to overtake North America as the world’s largest vehicle market.

Jewellery demand

The continuing impact of high and volatile prices of platinum caused jewellery demand to contract further. All regions, with the exception of India suffered, although this market has continued to disappoint from a volume perspective. Cheaper jewellery alternatives such as white gold and palladium will continue to erode platinum’s share, given the enormous price differentials.

* Estimate

Palladium

Demand for palladium fell marginally as a correction in the Chinese jewellery pipeline saw demand contract some 20%, which overshadowed increased demand in both the automotive and electronic sectors. However, these moves were completely overpowered by a near 2.0 million ounce destock by the Russian Central Bank, which left the market with a surplus of some 1.5 million ounces. Estimated inventory of Russian palladium in Zurich now exceeds 7.0 million ounces, which clearly is sufficient metal to sustain any unforeseen growth in demand or shortfall in supply.

* Estimate

Rhodium

A 10% increase in automotive demand to sustain and comply with greater NO_x emissions in gasoline engines, overshadowed a more modest 3% increase in supply, to leave the rhodium market with a 31,000 ounce deficit. While insignificant in the scheme of things, this metal’s usage (alloyed with platinum) in the LCD glass industry continues to grow as demand for items from large flat screen TVs to I-Pods is maintained.

*Estimate