PLATINUM MARKET FORECAST TO BE IN SURPLUS BY 290,000 OUNCES IN 2010
Gross platinum demand is forecast to rise by 11 per cent to 7.56 million ounces in 2010, according to Johnson Matthey in "PLATINUM 2010 INTERIM REVIEW", released today. Recycling of platinum in the autocatalyst, jewellery and electrical sectors is expected to increase by 31 per cent to 1.84 million ounces. Supplies of platinum from current mining operations are set to remain almost flat at 6.01 million ounces. As a result, net platinum demand is expected to increase by 6 per cent to 5.72 million ounces, putting the market in a small annual surplus of 290,000 ounces.

SUPPLIES OF PLATINUM ARE EXPECTED TO REMAIN ALMOST FLAT IN 2010
South African production of platinum is forecast to fall by 1 per cent to 4.59 million ounces as a series of safety stoppages and supply interruptions affect output. Supplies from North America are expected to fall by 19 per cent to 210,000 ounces mainly due to strikes. Supplies in Russia are expected to rise to 810,000 ounces due to improved productivity and processing of surface materials. Expansion at mines in Zimbabwe is set to increase the country’s output to 280,000 ounces.

AUTOCATALYST PLATINUM DEMAND TO RISE AS DIESEL VEHICLE MARKET RECOVERS
Global demand for platinum in autocatalysts is expected to strengthen by 37 per cent to 2.99 million ounces as vehicle production recovers from a dismal 2009. Gross demand for platinum in European autocatalysts is expected to increase by 46 per cent to 1.42 million ounces in an improved economic and credit environment. The ending of various national car scrappage incentives in Europe and a return to fleet vehicle buying is expected to favour purchases of diesel vehicles, and therefore platinum demand for exhaust aftertreatment. Recovery of platinum from spent autocatalysts is expected to rise by 32 per cent to 1.1 million ounces stimulated by higher platinum prices and the returns from car scrappage schemes.

INDUSTRIAL DEMAND TO GROW AS ECONOMIC RECOVERY GAINS MOMENTUM
Improved economic conditions in 2010 are expected to stimulate purchases of platinum across a range of industrial sectors, lifting gross industrial demand to 1.72 million ounces. Platinum demand in the glass industry is expected to recover strongly to 365,000 ounces as consumer purchases of LCD TVs and monitors drive the building of new manufacturing lines for LCD glass in Asia. Demand for platinum in the electronics sector is also forecast to rise, increasing to 225,000 ounces. Higher rates of factory utilisation, boosted by increased demand for consumer products, are anticipated to lift demand for process catalyst, bringing chemical demand for platinum to 450,000 ounces.

SOFTER DEMAND FOR PLATINUM JEWELLERY AS PRICES REMAIN HIGH
Gross global demand for platinum in the jewellery sector is forecast to drop by 14 per cent in 2010 to 2.42 million ounces as retailers and consumers reduce purchasing in response to higher prices in 2010. Demand for platinum jewellery in China is expected to fall by 21 per cent to 1.65 million ounces in 2010 as some consumers defer purchases. Higher platinum prices are anticipated to lift recycling levels by 30 per cent to 735,000 ounces.

INVESTMENT DEMAND FOR PLATINUM SET TO DECLINE
Despite the popularity of platinum exchange traded funds (ETFs), physical investment demand for platinum is forecast to fall by 34 per cent to 435,000 ounces in 2010. Higher prices are expected to reduce demand for platinum coins and bars, and encourage redemption of ETF positions.

PLATINUM EXPECTED TO TRADE ON AVERAGE AT $1,750 IN THE NEXT SIX MONTHS
With a recovering global economy driving autocatalyst and industrial demand, and some growth in platinum production, Johnson Matthey expects the platinum market to be close to balance in 2011. However, uncertainties remain over the impact of sovereign debt, tighter credit and national austerity measures on economic growth. The recent performance of platinum suggests that its price is being steered by speculative futures positions, ETF holdings and external influences such as the US Dollar and the gold price, rather than supply-demand fundamentals. Johnson Matthey forecasts that platinum will trade between $1,550 and $1,900 per ounce and will average $1,750 per ounce during the next six months. 

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