By Farai Mabeza
PLATINUM output is expected to fall in major producing countries, including Zimbabwe, an international report has said.
According to the Platinum Quarterly report from the World Platinum Investment Council (WPIC), total platinum supply is expected to decrease by two percent year-on-year to 7 795 koz (kilo ounces) in 2017 as both primary and secondary supplies are anticipated to decline this year. “Refined production is projected to fall by one percent to 5 970 koz as only North America sees an increase in output (+10 koz) this year, and this is outweighed by declines in South Africa (-15 koz), Zimbabwe (-45 koz), Russia (-10 koz) and other regions (-5 koz),” the report said. Secondary supply is forecast to slip by three percent year-on-year to 1 815 koz (-50 koz) as a decline in jewellery recycling (-110 koz) outweighs gains from autocatalyst recycling (+60 koz).
Excess retail stock was returned to manufacturers last year in China, boosting jewellery recycling, and this year it is expected to return to a more typical level. The market is expected to be close to balance this year, and while both supply and demand are forecast to contract, the larger decline in global demand will leave it just 15 koz higher than supply. Global demand is forecast to decline by six percent year-on-year to 7 810 koz owing to contractions in each of the main demand sectors.
Automotive demand is projected to slip by two percent (-75 koz). While some regions will see increased platinum usage, Western Europe, the largest automotive demand region, and Japan, will have lower metal requirements. Jewellery consumption is forecast to slip one percent to 2 590 koz (-15 koz) as a decrease in China, which is the largest platinum jewellery market, outweighs gains in all other regions. Industrial demand is expected to fall nine percent (-165 koz) to 1 610 koz this year, mainly as a result of fewer glass facilities being built compared to 2016 and lower net demand from the petroleum industry as some refineries are closed down.
The metal from these facilities expected to be recycled during 2017. Investment demand is forecast to be at 250 koz, notably lower this year than in 2016, mainly owing to reduced platinum bar purchases in Japan, which were unusually high in 2016 as the drop in the platinum price encouraged a significant increase in bar investment. Global refined supply is forecast to fall by one percent to 5 970 koz in 2017. South African output is predicted to decline by 0,4 percent (-15 koz) to 4 240 koz this year.
Mine restructuring and shaft closures announced to date are expected to result in a loss of 110 koz year-on-year, all taking place in South Africa. These losses should largely be offset by improved performances at some larger Western Limb mines, and continued ramp-up of chrome-PGM (platinum group metals) producing operations.
“Production from Zimbabwe is estimated to fall by nine percent to 445 koz. North American supply is forecast to rise by three percent to 405 koz with a planned increase in production at a USbased mine, while the Canadian operations are expected to record higher volumes in the second half of the year,” the WPIC said.
Output from Russia is forecast to decline by one percent to 705 koz this year, with depletion at surface operations offsetting stable supply from underground mines. A net reduction in producer stocks is forecast this year, but is not anticipated to be significant at around 10 koz. There was a small net sale from stock in the first half of 2017, indicating a potential restock in the second half of the year to maintain typical levels, if no issues arise.
Total mine supply is estimated at 5 980 koz for 2017, down one percent from 2016 levels (6 065 koz). The market is anticipated to have a slight deficit of 15 koz in 2017, which will reduce above ground stocks to 1 915 koz at the end of the year. The WPIC definition of above ground stocks is the year-end estimate of the cumulative platinum holdings not associated with exchange-traded funds, metal held by exchanges or working inventories of mining producers, refiners, fabricators or end-users.