Significantly lower platinum group metal supply deficits anticipated in 2015

The situation on the global platinum and palladium markets will ease noticeably this year. Johnson Matthey, the world's largest refiner of platinum and palladium, estimates that platinum supply will fall short of demand by 285,000 ounces - last year the supply deficit still amounted to 1.11 million ounces. 

Above all, a sharp rise in mining production in South Africa (+19% to 4.24 million ounces), which is recovering well from last year's five-month strike, is contributing to the more comfortable supply situation. Total demand looks set to remain virtually unchanged at 8.31 million ounces. Although demand from the automotive industry is likely to grow by 10% to 3.70 million ounces, this will probably be offset primarily by weak investment demand. 

Accordingly, 88,000 ounces net are expected to be sold from the platinum ETFs this year. Johnson Matthey believes the palladium supply deficit will decline from 1.83 million ounces in 2014 to just 100,000 ounces - essentially the same factors playing their part as with platinum. While South African mining production is set to grow significantly, total demand will decrease by 12% to 9.38 million ounces, first and foremost as a result of the anticipated ETF sales of 400,000 ounces net. 

In 2014, ETF holdings were increased by 932,000 ounces on a net basis. The growth in demand from the automotive industry to a new record high of 7.46 million ounces will not be sufficient to offset this. 

"All in all, the platinum and palladium markets in 2015 will no longer be as tight as they were last year, though there is every likelihood that they will remain in supply deficit for the fourth consecutive year, so prices is likely to be well-supported", expects Commerzbank.