Off The Wire
Platinum market set for second consecutive surplus in 2018 - WPIC
* Oversupply seen at 295,000 ounces in 2018
* Supply and demand both to shrink by 2 pct
By Peter Hobson
LONDON, Sept 6 (Reuters) - The global platinum market will be oversupplied by 295,000 ounces this year as both supply and demand of the autocatalyst metal fall by 2 percent, the World Platinum Investment Council (WPIC) said on Thursday.
Lower production of diesel vehicles in Europe will cut platinum use by auto makers by 6 percent, outweighing an increase in consumption by industry, the WPIC said in its latest Platinum Quarterly report.
Vehicle manufacturers use both platinum and palladium in emissions-cutting catalytic converters, but diesel engines use more platinum, and sales of these have fallen since Volkswagen was found in 2015 to have cheated emissions tests.
Supply will also fall due to lower output at mines in key producers South Africa, Zimbabwe and Russia, resulting in a second consecutive global surplus, said the WPIC, which is funded by platinum producers.
The second quarter was marked by a sharp fall in investment demand for platinum, as tumbling prices sapped interest in exchange traded funds backed by the metal.
But this has already begun to reverse and investment demand is expected to end the year only slightly lower, WPIC director of research Trevor Raymond said.
Platinum prices touched their lowest since 2008 in August after falling steadily from January, in part due to concerns of oversupply.
PLATINUM SUPPLY/DEMAND ('000 oz)*
Q2 2018 Q1 2018 Q2 2017 2018 (f) 2017
Mine supply 1,640 1,295 1,630 6,015 6,170
Recycling 480 455 480 1,895 1,890
TOTAL SUPPLY 2,120 1,750 2,110 7,910 8,060
Automotive demand 800 805 840 3,130 3,340 Jewellery demand 590 605 590 2,445 2,460 Industrial demand 445 465 415 1,790 1,700 Investment -55 50 100 250 265 TOTAL DEMAND 1,780 1,925 1,945 7,615 7,765
Balance 340 -175 165 295 295 Above-ground 2,495 2,200 stocks
* Source: World Platinum Investment Council, Platinum Quarterly Q2 2018
(Reporting by Peter Hobson; Editing by Kirsten Donovan)