PLATINUM MARKET MARGINALLY IN SURPLUS IN 2006

Global demand for platinum rose by 80,000 oz (2.4 tonnes) to 6.775 million oz (210.7 tonnes) in 2006, according to Johnson Matthey in PLATINUM 2007, released today. The autocatalyst market grew by over 10%, mainly due to the fitment of emission controls to light and heavy duty diesel vehicles. Expansions in South African mining capacity led mine supply to a record 6.785 million oz (211.0 tonnes). After seven successive years of deficits, supply and demand for platinum were effectively in balance, with a nominal surplus of only 10,000 oz (300 Kgs) in 2006.

GROWING DIESEL MARKET SHARE RAISES AUTOCATALYST DEMAND

With the market share of light duty diesel vehicles in Europe growing to over 50 per cent and the application of new emissions standards in early 2006, platinum consumption for autocatalysts in Europe rose by 200,000 oz (6.2 tonnes) to 2.160 million oz (67.2 tonnes). The new requirement for catalysts on medium-sized diesel vehicles in the USA and rapid growth in production of passenger vehicles in Asia also contributed to global auto demand of 4.195 million oz (130.5 tonnes, an increase of 400,000 oz (12.4 tonnes) compared to 2005.

RECYCLING AFFECTS JEWELLERY MANUFACTURING DEMAND FOR PLATINUM

The rising price of platinum led to a small decline in the volume of platinum jewellery produced in 2006, but purchases of new metal by manufacturers were further reduced by a sharp increase in recycling of old jewellery in China and Japan. The price had little impact on consumer purchasing in China, with retailers reporting higher sales turnover and only a slight fall in the weight of metal sold. However, upwards of a quarter of manufacturing requirements was satisfied by reusing metal from second-hand jewellery and unsold stocks. Total world jewellery demand fell by 360,000 oz (11.1 tonnes) in 2006 to 1.605 million oz (50 tonnes).

MARKET LIKELY TO REMAIN TIGHT IN FIRST HALF OF 2007

The auto industry’s consumption of platinum will increase again in 2007, with use in autocatalysts on light and heavy duty diesel vehicles responsible for most of the rise. Jewellery manufacturers in Asia will continue to source part of their platinum inputs from old stock, but consumer demand for platinum jewellery is encouragingly resilient. Weaker than planned supply from South Africa earlier this year and the recent hiatus in Russian exports due to regulatory problems are likely to mean a tight market in the first half of 2007, with liquidity expected to increase in the second half as South African mine output rises.

PLATINUM EXPECTED TO TRADE MAINLY BETWEEN $1,200 AND $1,400

With market stocks limited, demand increasing, delays in supply and commodity funds maintaining long positions in platinum, the price has strengthened in the first four months of 2007. The launch of exchange traded funds (ETFs) in platinum will potentially apply further upward pressure to the price, which could reach $1,400 per oz over the next six months. If funds become bearish towards commodities the price will weaken, but at $1,200 consumer and speculative purchasing can be expected to provide renewed support.

Platinum 2007 is Johnson Matthey's latest market survey of platinum group metals supply and demand. This report, widely regarded as the world’s principal source of information on platinum group metals, is free of charge. It is available in printed form on request from Johnson Matthey at the address below or can be viewed and downloaded at www.platinum.matthey.com/publications

Johnson Matthey is the world’s leading authority on the production, supply and use of platinum and the other metals of the platinum group. The company’s main activities include the manufacture of autocatalysts, platinum process catalysts and speciality chemicals and the refining, fabrication and marketing of platinum group metals.

Ÿ Adfero Ltd