May 19, 2020 / 4:11 PM / 16 days ago

Virus fallout will reduce palladium deficit and price - Heraeus

LONDON, May 19 (Reuters) - The global palladium market will see its smallest deficit since at least 2012 this year, while the platinum market remains significantly oversupplied, an industry report said on Tuesday.

Supply and demand for both metals will fall sharply as the coronavirus outbreak hits consumers and producers, the report by Heraeus Precious Metals and SFA Oxford said, predicting prices would fall.

Platinum, palladium and sister metal rhodium are used chiefly in vehicle exhausts to reduce emissions, though platinum is also used in jewellery and other industry.

The roughly 10-million ounce a year palladium market will be 30,000 ounces undersupplied in 2020 after a 680,000 ounce deficit in 2019, the report forecast.

The 8-million ounce platinum market will have a 1.3 million ounce surplus this year, up from 1.285 million ounces in 2019 and the biggest excess in at least eight years, it projected.

The 1-million ounce rhodium market will see a 50,000-ounce shortfall, up from 40,000 in 2019 and the largest since 2014.

Unlike some other forecasts, Heraeus’s do not account for investment demand. Investors soaked up most of the platinum oversupply last year, while selling palladium and rhodium back to the market.

Heraeus and SFA Oxford said they expected platinum prices around $680 an ounce in the next six months, with palladium around $1,675 an ounce and rhodium RHOD-LON around $5,250 an ounce.

That implies lower prices for all three metals. Platinum currently costs around $830 an ounce, palladium around $1,740 and rhodium around $7,400. (Reporting by Peter Hobson; Editing by Mark Potter)

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