Platinum to remain in deficit through next 6 years, council says

[LONDON] The platinum market will stay in a shortage in the next six years as supplies remain constrained amid growing or robust demand from jewelers and car companies, according to a report commissioned by the World Platinum Investment Council.

The deficit, which totaled 365,000 ounces in 2015, will average about 250,000 ounces a year though 2021, David Jollie, an independent consultant at Glaux Metal, said in the report. The global truck market, which uses the metal in devices to curb emissions, may double purchases in the next five years, he said.

While platinum has been in annual shortage since 2012, ample supplies of stockpiled metal and China's slowdown sent prices to a seven-year low this month. The rout has hurt some of the biggest miners, including Lonmin Plc, who have been forced to cut unprofitable production. If prices remain weak, there's a risk that output will decline further as producers reduce investment, according to Mr Jollie.

"The drivers for the continued deficit are split between the supply and demand side," Mr Jollie, the former head of research at Mitsui & Co Precious Metals Inc, said by phone. That "should help drive higher metal prices," he said.

Jewellery demand is expected to increase by about 1 per cent a year as Indian consumers buy more, while there will probably be little growth in Chinese demand for the items, according to the report. Total platinum consumption is estimated to total 8.1 million ounces this year.

Platinum for immediate delivery in London has dropped 31 per cent over the past year to about US$865 an ounce, according to Bloomberg generic pricing.

BLOOMBERG