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Platinum Price To Average $1,457/Oz In 2014; Palladium $793 – GFMS

By Kitco News
Friday May 2, 2014 12:35 PM

(Kitco News) - Platinum prices are expected to average $1,457 an ounce this year and palladium is seen averaging $793 an ounce, Thomson Reuters GFMS said Friday.

Versus the 2013 average price, the forecast platinum price is down 2%, while the palladium price is forecast up 9%. Thomson Reuters GFMS said the continued strikes against South African platinum miners have not resulted in noticeably higher prices so far in 2014, but that prices could rise in the second half of the year, even if strikes end soon. “There is, though, a risk of ‘knee-jerk’ falls when strike action ends, and some downward pressure from drifting gold prices mid-year,” the firm said.

They said palladium prices have likely bottomed out already this year and expectations of robust demand could push the metal to test $930 before the end of the year.

Because of strike action against platinum miners in South Africa, Thomson Reuters GFMS forecast production losses are likely more than 600,000 ounces, and even if the strikes end soon, losses will likely build because of absenteeism, underground “safe-start” preparation, retraining and production ramp-ups. Those factors are likely to contribute more than 300,000 in lost output. Palladium losses are estimated at 450,000 ounces, they said.

The total projected platinum losses are equal to seven weeks worth of global demand, based on 2013 figures, and the lost output will push platinum into a deficit this year after last year’s surplus, the consultancy said. The losses for palladium are equal to two weeks global demand at 2013 levels, and these losses will keep the metal in a deficit this year, the eighth straight year.

Thomson Reuters GFMS said the launch of two palladium exchange-traded funds out of South Africa helped to support the metal, although the firm added it considers the palladium going into the ETFs as movement of pre-existing stock. Also, analysts said they do not expect any more palladium shipments from Russian stocks this year, which underscores the market deficit.

The geopolitical events between Russia and Ukraine resulted in additional concerns around supply regarding potential sanctions on Russia that may limit PGM exports, Thomson Reuters GFMS said. The base case for the firm is that this will not happen, but they added that these events will give both metals, especially palladium, a risk premium.

Platinum scrap supplies from autocatalysts rose 9% in 2013, to 990,000 ounces, “reflecting healthy increases across all regions, following a year of notable declines in 2012, and thus reinstating the post-recession recovery path.” Platinum jewellery scrap fell by 5% in 2013 to an estimated 410,000 ounces.

Palladium supplies from autocatalyst recycling rose by 12.3% in 2013, to 1.60 million ounces, while jewellery scrap rose 12% to a record high of 290,000 ounces. The 13% rise in average palladium prices encouraged the scrap sales, they said.

For demand, platinum autocatalyst consumption fell by 1.2% to 2.91 million ounces in 2013, as Chinese and North American demand did not offset the drop in European demand. Palladium autocatalyst demand rose 3.3% to 6.27 million ounces.

Platinum jewellery fabrication rose less than 1% to 2.29 million ounces, driven by North American consumption. Palladium jewellery demand fell 11% to a 10-year low of 580,000 ounces, led by a sizable fall in Chinese demand.

Platinum Price To Average $1,457/Oz In 2014; Palladium $793 – GFMS

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