Global platinum demand will exceed supply this year by the most since 1999 as a greater volume of industrial purchases and more investment outweigh slower buying by jewellers and car-makers.

Revealing this in a special report released here, Johnson Matthey plc added that Palladium’s shortfall would narrow as consumption fell faster than supply, reports Bloomberg News.

“While car manufacturers will buy less platinum for the first time since 2009 more demand from chemical, electrical and glass industries, and record investment will widen the shortage by 78% to 605,000 ounces. Palladium’s deficit will narrow 36% to 740,000 ounces as less electrical, jewellery and investment demand outweighs the biggest ever purchases for metal used in catalytic converters and lower Russian stockpile sales,” it said.

The metals outperformed gold and silver this year on speculation that improving economies would boost demand for materials used in car pollution control devices. Lower supply from South Africa because of mine strikes and cutbacks and falling sales from Russian government palladium inventories helped keep the commodities in a shortage since 2012. The deficits will probably continue next year, Johnson Matthey added.

“We expect little or no serious recovery in South African supplies,” Alison Cowley, a market analyst at Johnson Matthey, said in an interview here. For platinum, “we’re seeing good demand from most industrial applications. In palladium it’s really an auto-catalyst story.”

Platinum for immediate delivery slipped 6.8% to US$1,435.30 an ounce in London this year. It will trade from US$1,360 to US$1,580 in the next six months, averaging US$1,465, Johnson Matthey estimated.

Palladium rose 6.9% to US$752.40 an ounce since the start of January and is expected to average US$760 in the next six months, ranging from US$680 to US$815.

Platinum buying from carmakers will fall 2% to 3.13moz this year on weaker demand for diesel cars in Europe and India, said Johnson Matthey, which makes about one in three of the world’s catalytic converters. Palladium usage in cars will rise 4% to 6.97Moz on a stronger market in China, where petrol-driven vehicles use more of the metal.
Gross platinum demand will rise 4.9% to a record 8.42Moz even as jewellery purchases slip 1.4% to 2.74Moz, the company said. Gross palladium consumption will fall 3.4% to 9.63Moz as combined usage across chemical, electrical and dental industries falls to the lowest since 2004. Jewellery buying will drop 12% to a 10-year low of 390,000 ounces, it estimates.

“Jewellery is lower than last year in platinum but it’s still pretty strong and there’s lots of potential for growth there,” Lucy Bloxham, research manager at Johnson Matthey, also said

Platinum investment will rise 68% to a record 765,000 ounces this year as palladium investment slumps 84% to 75,000 ounces, the researcher expects.

Platinum mine output that fell to a 12-year low in 2012 will gain 1.6 percent to 5.74Moz this year as Zimbabwean production rises, Johnson Matthey said. Palladium supply will slip 1.5% to 6.43Moz in 2013, the lowest since 2002.

Rhodium’s shortage will widen to 14,000 ounces this year, from 1,000 ounces in 2012, as demand rises 4.3% to a six-year high of 1.02Moz and supply remains unchanged, Johnson Matthey said.

Ruthenium consumption will climb 25% to 828,000 ounces on higher electrical use. It’s mostly used for coating computer hard disks. Demand for iridium, used in spark plugs and for growing metal oxide crystals, will increase 2.1% to 198,000 ounces.

Source: Bloomberg News. For more information, click here.