November 21, 2019 / 6:00 AM / 16 days ago

Investors push platinum into deficit, but surplus will return- WPIC

    By Peter Hobson
    LONDON, Nov 21 (Reuters) - A surge in investment buying will
push the global platinum market into a small deficit this year –
the first since 2016 – but a hefty surplus will return in 2020,
the World Platinum Investment Council (WPIC) said on Thursday. 
    Investors betting that prices of platinum will rise
from close to 10-year lows will buy 1.2 million ounces this
year, up from just 15,000 ounces in 2018, the WPIC said in its
latest quarterly report.
    That will more than offset decreases in platinum use in
jewellery, auto manufacturing and other industries, pushing the
roughly eight-million ounce a year market to a shortfall of
30,000 ounces, it said. 
    However, the WPIC forecast that investor purchases would dip
to 525,000 ounces next year, and this along with further
declines in auto and jewellery consumption will create a surplus
of 670,000 ounces.
    Nearly two-fifths of platinum is used in vehicle exhausts,
mainly for diesel engines, to reduce harmful emissions. 
    But a decline in diesel vehicle sales since a Volkswagen
emissions scandal in 2015 has sapped demand. This helped push
platinum prices to a low of $751.25 an ounce last year -- around
half its value in 2014 -- before a recovery to around $900. 
    
    
    Diesel's market share has now stabilized and platinum has
become cheap compared to palladium and rhodium
RHOD-LON, which are also used to curb vehicle emissions. As a
result, some investors believe demand from the auto industry
will rise, pulling prices higher. 
    The WPIC is funded by mining companies but uses data from
SFA Oxford, an independent consultancy. It said its figures did
not include any assumption of higher diesel vehicle sales or a
switch by auto makers to platinum from other metals. 
        
  PLATINUM SUPPLY/DEMAND ('000 oz)*           
                     2020(f)         2019  % change
 Mine supply             6,110      6,205             -2%
 Recycling               2,000      1,990              1%
 TOTAL SUPPLY            8,110      8,195             -1%
                                                         
 Automotive demand       2,860      2,960             -3%
 Jewellery demand        2,110      2,160             -2%
 Industrial demand       1,945      1,905              2%
 Investment                525      1,200            -56%
 TOTAL DEMAND            7,440      8,225            -10%
                                                         
 Balance                   670        -30          -2333%
 Above-ground            3,025      3,695            -18%
 stocks                                    
   
                     Q3 2019    Q3 2018    % change
 Mine supply             1,460      1,645            -11%
 Recycling                 500        490              2%
 TOTAL SUPPLY            1,960      2,135             -8%
                                                         
 Automotive demand         695        715             -3%
 Jewellery demand          545        565             -4%
 Industrial demand         465        470             -1%
 Investment                230         65            254%
 TOTAL DEMAND            1,935      1,815              7%
                                                         
 Balance                    25        320            -92%
   * Source: World Platinum Investment Council, Platinum
Quarterly Q3 2019
        

    
 (Reporting by Peter Hobson; editing by David Evans)
  
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