China's Silver, PGMs demand to improve in 2014: Barclays

Beijing-China (Jan 22)  China's demand for precious metals were on high note in 2013 and the demand for silver is yet to show stability but the industrial demand for silver and palladium are expected to improve in 2014.

China’s appetite for the PGMs closed in 2013 on a strong note. However, the sluggish demand for silver in 2013 is expected to improve in 2014. Platinum imports were up 24% annually in 2013 surpassing 3 Moz and in December grew 90% y-o-y at 369koz, the second strongest month on record, behind March 2010 at 378koz, a Barclays report said.

According to Barclays, the industrial demand for silver is expected to improve this year supported in part by modest global growth; however, China’s imports are yet to show signs of growth. Imports were down 6.2% y/y and 3% m/m, silver exports were down 25% y/y in December. For the full year, imports were down 11%, while exports were up almost 50% y/y, but China retained its status as a net importer. The latest semiconductor billings data revealed a slowdown in shipments to Asia-Pacific down 1% m/m but continued growth at 6% y/y in November.

Platinum volume traded on the Shanghai Gold Exchange was also up 90% y/y in December, supported in part by softer prices m/m and y/y and has already more than doubled y/y in January.. Imports into China and Hong Kong combined for the year to November were up 16% y/y at a record 4.1Moz.

Although palladium imports have slowed during 2013, they also closed the year on a firm note, up 70% y/y at 70.8koz, above the average run rate for the past two years. Imports for the full year were up 9% at 714koz but below 2011 levels.

China's auto mobile sector expects a growth of 9.3% y/y and sales to grow by 8% across Greater China, while the CAAM expects demand to grow by 8-10% y/y in 2014. Underlying demand growth should continue to support palladium consumption, but despite tighter emissions legislation concerns continue to linger over pollution. China’s Atmospheric Pollution Prevention Action Plan aims to improve air quality by 2017, and with respect to autos, aims to eliminate highly pollutant cars and control the number of cars in large cities. All these factors are likely to lead China’s palladium demand growth by 7% y/y in 2014.