A new study has suggested today (18th November) that the platinum market is on course to show a deficit of 240,000 oz in 2008.

The precious metal has certainly had an eventful year, with tight fundamentals taking the price to a record $2,236 in March, before the global financial crisis pushed it down to $1,004 at the end of September.

Now Johnson Matthey has released its Platinum 2008 Interim Review, which found that platinum supplies will fall by 4.2 per cent to 6.28 million ounces in 2008, while demand is set to slide by 2.3 per cent to 6.52 million ounces.

The decline in supply has been felt most in South Africa, where the mining sector has endured a turbulent year, encompassing Eskom's electricity crisis, smelter outages, a lack of skilled staff and a number of safety-related issues and mine shutdowns.

As a result, supply in the country is set to fall by 250,000 oz to 4.78 million ounces in 2008 and production in Russia is expected to drop by 855,000 oz, although supplies in North America and Zimbabwe should rise.

The company also found that gross global demand for the production of autocatalysts will increase by around 85,000 oz to 4.23 million ounces, despite demand falling by 305,000 oz in North America.

This figure is boosted by a considerable year-on-year rise in the number of diesel particulate filters being used on light-duty vehicles in Europe, plus higher output in growing economies such as China and India.

The research also shows that platinum investment demand is set to fall by 25,000 oz to 145,000 oz for the year, after significant ETF buying in the first quarter and redemptions in the third quarter which drove the price lower.

Johnson Matthey expects platinum to trade between $700 and $1,400 in the next six months, depending on how the ongoing effects of the global financial crisis manifest themselves.

However, the company notes that the fundamentals remain strong and that the considerable sales of platinum by hedge funds in Q3 underline the importance of investor sentiment to the precious metal.

Source:

JOHNSON MATTHEY RELEASES "PLATINUM 2008 INTERIM REVIEW" (18/11/08)
http://www.platinum.matthey.com/publications/pgmreview.html