November 21, 2017 / 7:01 AM / a year ago

Platinum market deficit to expand sharply in 2018 - WPIC

    * Platinum market deficit seen at 275,000 oz next year
    * Autocatalyst demand to shrink 1 percent
    * Jewellery usage to rise for first time since 2014

    By Peter Hobson
    LONDON, Nov 21 (Reuters) - The global platinum market
deficit will rise sharply next year thanks to resurgent demand
from the jewellery and industrial sectors and declining
production, an industry report said on Tuesday. 
    The shortfall will jump to 275,000 ounces from an expected
15,000 ounces this year, the World Platinum Investment Council
(WPIC) said in its latest Platinum Quarterly report. 
    That would put the industry in deficit for a sixth
consecutive year and cut above-ground stocks to 1.605 million
ounces by the end of next year, said the WPIC, which is funded
by platinum mining companies. 
    "For five years these stocks have been feeding deficits ...
it does appear the platinum market is much tighter than it's
ever been in the last five or six years," said the WPIC's head
of research Trevor Raymond.
    Platinum prices have risen 5 percent this year after
hitting a more than seven-year low in 2016, but lagged palladium
, which is up 45 percent. In September palladium became
more expensive than platinum for the first time since 2001. 
    Both metals are used in the vehicle industry for
emissions-cutting catalytic converters but platinum is used more
in diesel engines which have fallen out of favour following the
Volkswagen emissions scandal in 2015. 
    Platinum use in autocatalysts, which accounts for more than
40 percent of platinum demand, will fall 1 percent in both 2017
and 2018, the WPIC forecast. 
    Overall, the WPIC said platinum demand would rise 2 percent
to 8.030 million ounces next year after falling 6 percent in
2017 to 7.845 ounces. 
    Double digit growth in India and a stable market in China is
expected to drive jewellery usage up 3 percent next year, the
first rise since 2014, while a rebound in demand from the
petroleum and glass sectors is projected to raise industrial
usage by 9 percent.
    The WPIC said output would fall 1 percent in 2017 and 2018,
with production in South Africa, which accounts for more than
half of total supply, falling 2 percent next year due to mine
    Years of low capital investment mean output will stay low,
said Raymond. "Decline is likely to continue and more
importantly the ability to increase output is extremely low. It
takes a lot of time to get output to increase."
                    Q3 2017  Q2 2017  Q3 2016  2017(f)  2018(f)
 Mine supply          1,485    1,625    1,515    5,970    5,855
 Recycling              480      480      510    1,860    1,900
 TOTAL SUPPLY         1,965    2,105    2,025    7,830    7,755
 Automotive demand      785      850      780    3,365    3,335
 Jewellery demand       625      625      650    2,590    2,655
 Industrial demand      385      405      460    1,640    1,790
 Investment             -10       90       50      250      250
 TOTAL DEMAND         1,785    1,970    1,940    7,845    8,030
 Balance                180      135       85      -15     -275
 Above-ground                                    1,880    1,605
    * Source: World Platinum Investment Council, Platinum
Quarterly Q3 2017

 (Reporting by Peter Hobson; Editing by Mark Potter)
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