Platinum is expected to remain in surplus despite rising demand from the jewellery sector, says a metals consultancy.
In its report, “Platinum & Palladium Survey 2009,” GFMS says slumping automotive sales and lower production will offset any gains from an increase in demand for the metal in jewellery fabrication. However, the group is also predicting a marked recovery in the fourth quarter due to lower prices.
The use of platinum in catalytic converters accounts for 55 per cent of worldwide demand. Gross surplus more than tripled to over 260,000 ounces in 2008, mostly due to automotive applications, but also given a 10 per cent drop in jewellery fabrication in the first half of the year due to record-high prices. Last March, platinum hit $2376 per ounce.
An increase in recycling scrapped converters and finished jewellery will also see less demand for platinum this year, GFMS predicts.
While palladium saw more use in autocatalyst applications as a substitute for platinum, the decrease in automotive production lowered its demand by six per cent last year. However, its use in jewellery fabrication saw a slight increase, particularly in the Chinese market.
Overall, GFMS says investors will continue to look to precious metals in 2009 as safe havens from topsy-turvy stock markets.
The consultancy estimates platinum will top $1300 per ounce, while palladium will trade above $300 by the end of the year.
