Platinum shortfall seen for 5th straight year

Tokyo-Japan (Mar 9)  The platinum market will likely face a supply shortage for the fifth straight year in 2016. An additional 4 tons of the precious metal are needed to meet demand for the year, according data released by the World Platinum Investment Council, which is comprised of six leading platinum producers.

     The outlook is mainly driven by last year's price decline that is dealing a heavy blow to major platinum producers. Resource companies have begun freezing mine development projects due to their poor performance. This move is giving extra momentum to international platinum prices, which have recently started to recover.

In New York, the benchmark platinum futures contract traded above $1,000 per troy ounce in after-hours trading on Tuesday. That is the highest level since late October last year.

     South Africa, the leading producer of the metal, has seen a halt in the decline of its currency, while sales of cars, which use parts made of platinum, remain firm. In light of these factors, investors have been more keen to buy the metal as they see the supply-demand balance tightening.

     The WPIC said the platinum supply will be 189 tons in 2016, down from 190 tons in the previous year. Total supply, including recycling, will rise 3% on the year to 250 tons. However, this figure is 2% lower than demand forecast for 2016.

     The platinum market has been facing a supply shortage since 2012.

Difficult balance

Platinum mines go more than 1,000 meters below the surface in South Africa, which supplies about 70% of the world's platinum. Working at such depths has reduced efficiency and pushed up production costs.

     Last year, most mining companies in South Africa were unable to maintain profitability, with platinum prices briefly falling more than 30% lower than production costs. Major miners Anglo American and Lonmin suspended new investments in development. Job cuts and sell-offs of mines are also underway.

     Impala Platinum launched two development projects in the two years through 2004. The deals are the latest development in the platinum market, where it is said to take 15 years for a new mine to reach full extraction capacity. An executive at Impala Platinum said that a tight supply-demand balance will continue until around 2020 at the earliest.

~~The platinum market will likely face a supply shortage for the fifth straight year in 2016. An additional 4 tons of the precious metal are needed to meet demand for the year, according data released by the World Platinum Investment Council, which is comprised of six leading platinum producers.

 The outlook is mainly driven by last year's price decline that is dealing a heavy blow to major platinum producers. Resource companies have begun freezing mine development projects due to their poor performance. This move is giving extra momentum to international platinum prices, which have recently started to recover.

In New York, the benchmark platinum futures contract traded above $1,000 per troy ounce in after-hours trading on Tuesday. That is the highest level since late October last year.

     South Africa, the leading producer of the metal, has seen a halt in the decline of its currency, while sales of cars, which use parts made of platinum, remain firm. In light of these factors, investors have been more keen to buy the metal as they see the supply-demand balance tightening.

     The WPIC said the platinum supply will be 189 tons in 2016, down from 190 tons in the previous year. Total supply, including recycling, will rise 3% on the year to 250 tons. However, this figure is 2% lower than demand forecast for 2016.

     The platinum market has been facing a supply shortage since 2012.

Difficult balance

Platinum mines go more than 1,000 meters below the surface in South Africa, which supplies about 70% of the world's platinum. Working at such depths has reduced efficiency and pushed up production costs.

     Last year, most mining companies in South Africa were unable to maintain profitability, with platinum prices briefly falling more than 30% lower than production costs. Major miners Anglo American and Lonmin suspended new investments in development. Job cuts and sell-offs of mines are also underway.

     Impala Platinum launched two development projects in the two years through 2004. The deals are the latest development in the platinum market, where it is said to take 15 years for a new mine to reach full extraction capacity. An executive at Impala Platinum said that a tight supply-demand balance will continue until around 2020 at the earliest.

Source: AsianReview