Johnson Matthey has increased its estimate of last year’s platinum market deficit after a surge in Japanese bar investment late in the year.
The company has, however, lowered its expectations for the palladium market shortfall. JM’s general manager for market research Peter Duncan said he expected deficits for both metals to persist this year, although he also said this may have little impact on prices.
Speaking at the recent ETF Securities’ annual investment conference, Mr Duncan said the metals, currently sitting near multi-year lows, had been hurt by dollar strength, a slowdown in major metals consumer China, plus a loss of investor interest.
He said the company doesn’t really see much change from current price levels in the next few months, and that they continue to be surprised by the lack of price response.
Platinum hit its lowest point in more than seven years on Wednesday at $812.09 an ounce, while palladium reached a 5-1/2 year low earlier this month at $449.55.
“Eleven tonnes came out of palladium ETFs in South Africa in the last quarter of last year, and that’s a swing of nearly 50 tonnes (from) positive investment in 2014,” he said. “In the absence of a large physical bar market like the one we have for platinum in Japan, ETFs really dominate the physical investment scene for palladium.”
Mr Duncan said that despite an expected rise in platinum supply from recycling and marginally lower investment next year, “we do still expect the platinum market to post a fifth consecutive year of fundamental deficit in 2016”, with industrial demand holding firm and little change expected in South African supply.
It also forecasts a growing deficit in the palladium market, with autocatalyst demand rising and investment less negative than in 2015.