May 17, 2020 / 11:04 PM / 9 days ago

Platinum surplus will remain modest despite coronavirus chaos - WPIC

    LONDON, May 18 (Reuters) - Platinum demand will plummet by
18% this year and supply by 13% as the coronavirus batters the
global economy, leaving the market with a moderate surplus, the
World Platinum Investment Council (WPIC) said on Monday. 
    In its latest quarterly report, the WPIC revised its
forecast for oversupply this year in the roughly 8-million ounce
platinum market to 247,000 ounces from 119,000 ounces. 
    All major consumers of platinum - automakers, jewellers,
industry and investors - will want less metal this year,
according to the WPIC. 
    But "the net effect (of the coronavirus) is less than
feared, and the outlook for 2020 is better than expected," it
said. 
    It forecast demand in 2020 at 6.95 million ounces and supply
at 7.2 million - the lowest for both since at least 2013.
    The platinum market was upended in February and March as the
coronavirus spread across the globe, shutting factories, shops
and mines. 
    Prices plunged as much as 45% to $558 an ounce before
recovering to around $750. 
    Lower prices propelled a surge in buying, particularly by
bargain-hunting investors in Japan and industrial consumers in
China, the WPIC said. 
    Bars and coin purchases almost tripled year-on-year in the
first quarter to 312,000 ounces, and the WPIC expects them to
reach 605,000 ounces for the full year, more than double their
level in 2019.
    Exchange traded funds storing metal for larger investors,
however, will not increase their holdings at all this year after
adding more than a million ounces in 2019, the WPIC said. 
    Demand from the auto industry - which uses platinum to
reduce vehicle emissions - will fall by 14% this year even as
consumption in China rises 14% due to tighter emissions
standards, according to the report.
    Sales of diesel vehicles, which use more platinum, could
also benefit if the coronavirus crisis slows efforts to
transition to electric vehicles, said the WPIC's director of
research, Trevor Raymond. 
    On the supply side, output in South Africa, the biggest
producer, will fall 17% in 2020 to 3.65 million ounces, while
the other top producers Zimbabwe, North America and Russia will
see their output shrink between 1% and 5%.     
    
    PLATINUM SUPPLY/DEMAND ('000 oz)*    
 SUPPLY                2020 (f)      2019  % change
 Mine supply              5,287     6,097      -13%
 Recycling                1,910     2,165      -12%
 Total supply             7,197     8,262      -13%
                                                   
 DEMAND                                            
 Automotive               2,481     2,894      -14%
 Jewellery                1,785     2,100      -15%
 Industrial               2,080     2,184       -5%
 Investment                 605     1,252      -52%
 Total demand             6,950     8,430      -18%
                                                   
 Balance                    247      -168          
    
 SUPPLY                Q1 2020   Q1 2019   % change
 Mine supply              1,283     1,332       -4%
 Recycling                  490       549      -11%
 Total supply             1,773     1,881       -6%
                                                   
 DEMAND                                            
 Automotive                 634       766      -17%
 Jewellery                  401       540      -26%
 Industrial                 534       549       -3%
 Investment                  79       794      -90%
 Total demand             1,649     2,649          
                                                   
 Balance                    124      -768          
    * Source: World Platinum Investment Council, Platinum
Quarterly Q1 2020   
    

 (Reporting by Peter Hobson)
  
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