May 14, 2015 / 7:32 AM / 3 years ago

Platinum price could test $1,000/oz in 2015 -GFMS

* Average platinum price seen falling 16 pct this year

* Platinum market deficit expected to narrow in 2015

* S.African output hit at least 15-year low in 2014

By Jan Harvey

LONDON, May 14 (Reuters) - Platinum prices could test $1,000 an ounce this year, a level not seen since early 2009, as supply from South African mines and global autocatalyst recyclers climbs, GFMS analysts at Thomson Reuters said in a report on Thursday.

Spot prices, which have fallen 35 percent over the last five years, are forecast to average $1,170 an ounce in 2015 as rising supply cuts the deficit in the platinum market to 670,000 ounces.

“The price trajectory from current levels is upwards, towards $1,290,” GFMS said in its annual Platinum and Palladium Survey. “However, the upside potential will be limited, and we would not be surprised if platinum tested $1,000 an ounce this year.”

“The bearish view is based on the increase in supply, more specifically the estimated 22 percent rise in South Africa’s mine production and 10 percent rise in autocatalyst scrap.”

The shortfall in the platinum market hit 1.016 million ounces last year as mine output fell to a 15-year low on the back of a five-month strike among South African platinum miners.

The strike, and the period of slow ramp-up after it was resolved, cost the market 1.36 million ounces of supply, GFMS said. A modest rise in demand from the 2013’s four-year low helped push the market into a hefty deficit.

Demand is expected to rise to an eight-year high at 7.72 million ounces this year, chiefly on the back of an increase in offtake from carmakers and the glass industry. Last year autocatalyst demand edged up 3.6 percent.

However, in the absence of a reduction in output of the metal, the market could push into surplus in 2016, GFMS said.

“Without enduring production cuts to be achieved by permanently closing high cost mines, the platinum market is expected to return to surplus next year,” GFMS’ research director for mining, William Tankard, said.

“It’s a huge challenge as a producer to make that call, incur restructuring costs and permanently close capacity, if you believe the price will recover in the short- to medium-term.”

Jewellery demand, which fell 3 percent last year, is expected to rise 4 percent in 2015. Retail investment demand is expected to rise 20 percent as prices fall towards the bottom of their forecast range for the year.

Platinum’s sister metal palladium is expected to steady at $800 an ounce this year, although the outlook is more bullish as stricter emissions standards and rising autocatalyst demand keep the market in deficit.

The metal saw a deficit last year of 2.176 million ounces, chiefly due to the strike in South Africa. Supply from the country, the second largest palladium producer after Russia, fell 20 percent to 1.89 million ounces, the lowest since 2000. (Reporting by Jan Harvey, editing by David Evans)

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