November 28, 2018 / 6:00 AM / 17 days ago

Platinum market set for big surpluses in 2018 and 2019 - WPIC

    * Surplus seen at 505,000 oz this year, 455,000 oz next year
    * Fall in autocatalyst demand to slow next year
    * Jewellery, industrial and investment demand to rise in
2019
    * Platinum supply-demand balance: tmsnrt.rs/2RdcdAF
    * 2018 asset returns: tmsnrt.rs/2jvdmXl

    By Peter Hobson
    LONDON, Nov 28 (Reuters) - The global platinum market will
be oversupplied by around half a million ounces both this year
and next, an industry report said on Wednesday, suggesting
little respite for producers facing prices languishing near
10-year lows. 
    In its latest Platinum Quarterly report, the World Platinum
Investment Council (WPIC) revised its forecast for oversupply
this year to 505,000 ounces from 295,000 ounces, blaming weak
demand for platinum jewellery, and said 2019 would see a surplus
of 455,000 ounces. 
    "Supply will grow (in 2019) but demand will grow even more,
and reduce the surplus slightly," said the WPIC's head of
research Trevor Raymond.
    Platinum prices hit a 10-year low in August and are
down 9 percent this year.
    The market flipped from deep deficit earlier this decade to
surplus as falling use by automakers, jewellers and investors
pushed demand from 8.5 million ounces in 2013 to an estimated
7.5 million ounces this year, said the WPIC, which is funded by
platinum miners. 
        
    
    Raymond said the decline in demand from carmakers would slow
next year, while jewellery demand would expand for the first
time since 2014, and consumption by industry and investors would
grow strongly, lifting total demand by 2 percent. 
    Demand from automakers -- which embed platinum in
emissions-reducing catalytic converters and account for around
40 percent of platinum use -- will fall by 1 percent in 2019
after a 7 percent plunge this year as a decline in sales of
diesel vehicles in Europe slows, the WPIC said. 
    Carmakers use both platinum and sister metal palladium in
autocatalysts, but platinum is used more in diesel engines whose
popularity plummeted after Volkswagen was found to have cheated
emissions tests in 2015. 
    The WPIC said it assumed no significant substitution next
year of palladium for platinum, which is trading at a roughly
$300 discount to its sister metal after last year becoming
cheaper than palladium for the first time since 2001. 
    Demand for platinum in jewellery will rise by 1 percent in
2019 after a 2 percent decline this year, the WPIC said. 
    Use in industry will increase by 4 percent in 2019 after an
8 percent rise this year and demand for platinum bars and coins
for investment will double from 125,000 ounces this year. 
    On the supply side, the WPIC said higher output at mines in
South Africa and North America and increased recycling would
push supply up 2 percent in 2019 after a 1 percent fall this
year.
            
  PLATINUM SUPPLY/DEMAND ('000 oz)*     
                    Q3 2018  Q2 2018  Q3 2017  2018(f)  2019(f)
 Mine supply          1,630    1,655    1,570    6,065    6,170
 Recycling              485      480      480    1,910    1,935
 TOTAL SUPPLY         2,115    2,135    2,055    7,975    8,105
                                                               
 Automotive demand      720      805      785    3,110    3,075
 Jewellery demand       580      590      580    2,405    2,430
 Industrial demand      450      470      425    1,830    1,895
 Investment              60      -55      -10      125      250
 TOTAL DEMAND         1,810    1,810    1,780    7,470    7,650
                                                               
 Balance                305      325      270      505      455
 Above-ground stocks                             2,665    3,120
    * Source: World Platinum Investment Council, Platinum
Quarterly Q3 2018
 

    
 (Reporting by Peter Hobson; editing by David Evans)
  
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