HIGHER SUPPLY OFFSET BY STRONG CATALYTIC CONVERTERS DEMAND
Platinum Group Metals (PGMs) prices will peak this year. According to experts, the demand of PGMs is likely to exceed the production this year. As a result, the precious metals are expected to record deficits in 2016. Still backed by China’s growth, automotive production is going to increase, so the catalytic converter demand will keep on surging.
Moreover, broader macroeconomic factors, such as the gradual monetary tightening in the US, will lead up to higher PGMs prices.
As a reminder, PGMs prices formerly fell in 2014 as the production recovered after a bad year for all raw materials in general, combined with the end of strikes in platinum mines in South-Africa. More recently, the decline of demand for diesel vehicles owing to the Volkswagen scandals, also drove the prices down in 2015.
PLATINUM: FROM OVERSUPPLY TO DEFICIT
While scrap catalysts recycling decreased by 14% to reach 930,000 ounces, platinum demand for catalytic converters rose by 2% towards 3 million ounces in 2015. But both the upswing of mine production and the Volkswagen scandal first turned the platinum market into an oversupply of 265,000 ounces.
However, driven by the new legislation implemented on autocatalyst manufacturers, the platinum market should go into deficit around 800,000 ounces. Now, Platinum is forecast to end the year at $1,200 per ounce.
PALLADIUM: REDUCING THE SHORTAGE
In 2015, a 9% increase in mine production dramatically reduced the palladium shortfall towards 290,000 ounces. Autocatalyst scrap also supported the supply around 1.6 million ounces. Up to 4%, the demand for new catalytic converters reached 6, 89 million ounces though.
Now at $597, palladium is expected to be sold at $750 an ounce before the end of the year.
To mitigate the palladium rate volatility, even the producers like Norilsk Nickel - one of the biggest miner of palladium in the world – has just started purchasing palladium on the market.
RHODIUM: TARGETED BY SPECULATIVE GAMBITS
Rhodium prices plummeted this week when banks reduced their offers to draw industrial buyers, scarcer these days.
PGM refiners Johnson Matthey and BASF respectively ended Thursday at $675/oz and $680/oz after starting the week at $725/oz.
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