Demand and prices for platinum will remain firm but the outlook for palladium is less positive, according to Johnson Matthey in its latest platinum 2002 review, published this week.
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Demand for platinum reached a record 6.15 million oz in 2001, driven by a one-third increase in demand from the vehicle industry for catalytic converters.
Supplies of platinum, although up by 11% to 5.86 million oz, fell short of demand by 290,000 oz, the third year of deficit. South African mine expansions provided an extra 300,000 oz and Russian sales rose by 200,000 oz.
The price fell from $645 in January 2001 to $406 in October as the world economy deteriorated and speculators became negative towards platinum. Better economic prospects and firmer consumer demand have already led to a recovery.
Johnson Matthey expects demand growth in 2002 to absorb increased mine supplies, and predicts a price range of $480 to $580 for platinum for the next six months.
Demand for palladium in 2001, at 6.73 million oz, was down by 25%. A slump in production of electronic components and high metal stocks caused demand for palladium in the electronics sector to fall by over two-thirds. Auto and dental industries also reduced inventories and replaced palladium with platinum.
Supplies declined by 6% to 7.32 million oz, with Russian sales being cut back sharply in the second half. Nevertheless, supply exceeded demand by 590,000 oz.
The slump in palladium demand contributed to a price collapse from $1,094 in January 2001 to $315 in October. Recently the price has been more stable, suspended between sluggish demand and restricted Russian supply.
With consumers likely to further reduce their use of palladium in 2002, the price is expected to remain relatively weak, ranging from $250 to $400 for the rest of the year.
