World demand for platinum reached 6.7 million oz in 2005, an annual rise of 160,000 oz, according to Johnson Matthey in ‘PLATINUM 2006’, released today. Purchases by the autocatalyst sector again grew strongly. Supplies of platinum grew by 140,000 oz to 6.63 million oz, with greater output from South Africa and Russia. Accordingly, the platinum market was undersupplied by 70,000 oz, the seventh successive year of deficit.

Autocatalyst demand for platinum surged by 330,000 oz to a new high of 3.82 million oz. Most of the growth occurred in Europe and stemmed mainly from tighter emissions rules and the increased use of catalysed soot filters on light duty diesel vehicles. Purchases of platinum for jewellery manufacture fell by 200,000 oz to 1.96 million oz. The high price of platinum prompted a reduction in stocks across the trade and an increase in recycling of old jewellery.

POSITIVE OUTLOOK FOR 2006

Platinum autocatalyst demand will strengthen in 2006, with further growth from the European diesel sector taking total purchases past the 4 million oz mark. Demand for platinum jewellery from affluent consumers in all major regions remains relatively robust, but further appreciation of the platinum price may bring about more liquidation of trade stocks. If supplies from South Africa increase as planned, Johnson Matthey expects the platinum market to remain in moderate deficit in 2006.

FUNDS COULD PUSH PLATINUM PRICE TO $1,250

The price of platinum traded between $860 and $880 for much of the first half of 2005. The second half was marked by increased volatility and a strong rally, as a substantial influx of fund money propelled the price to $1,012 in December. With no end in sight to the current commodities bull market, the price has potential to reach $1,250 during the next six months, with good end user demand likely to limit the downside to $1,025.