Today we publish our ninth Platinum Quarterly data set, which examines activity in the third quarter of 2016. In the analysis from our research partners SFA (Oxford), we revise the forecast of supply and demand for the full year 2016, highlighting that the deficit for the full year 2016 will be lower than previously forecast, as a result of softening of Chinese jewellery demand.
The Foreword to the report includes an insight on platinum demand fundamentals and a brief overview of our market development activities.
Key data from the study, which can be downloaded here, includes:
SFA's revised supply and demand forecast has recast the full-year 2016 deficit, scaling it back by 350 koz, to a predicted deficit of 170 koz:
Global demand in 2016 is forecast to decrease by 3 per cent year-on-year to 8,040 koz, while total platinum supply is expected to be marginally lower year-on-year at 7,870 koz.
Total supply is set to be 35 koz lower year-on-year, as lower refined production in South Africa (-230 koz) outweighs an increase in jewellery recycling (+110 koz) related to weaker consumer offtake in China.
Jewellery demand is projected to fall by 300 koz this year – down 10 per cent year-on-year – with growth in India, North America and Western Europe unable to offset lower manufacturer buying in China and Japan.
Industrial demand in 2016 is expected to rise by 2 per cent year-on-year following stronger demand for use in chemical catalysis, petroleum refining and other industrial end-uses.
Total investment demand for the year is forecast at 350 koz due to robust bar and coin demand and a modest decline in ETF holdings.
The forecast market deficit of 170 koz in 2016 is expected to reduce estimated above ground stocks to 2,145 koz at the end of the year.
For the third quarter of 2016, today's report shows a fall in both supply and demand.
Total global supply of platinum was down 9 per cent from Q2 2016 to 2,000 koz, with total mining supply estimated at 1,490 koz.
Total global demand for platinum was 1,940 koz during the third quarter, down by 5 per cent from Q2 2016 and by 17 per cent year-on-year.
Total mining supply in Q3 declined 235 koz quarter-on-quarter due to lower production from South Africa. This was driven by safety stoppages and producers replenishing inventories used during outages earlier in the year.
Total recycling in Q3 increased 30 koz quarter-on-quarter to 510 koz, as higher jewellery recycling (+55 koz) from retailer destocking in China more than offset a decline in autocatalyst secondary supply (-25 koz).
The main contributing factor to the decline in Q3 demand was seasonally lower autocatalyst demand, down 90 koz quarter-on-quarter. This was partly offset by the 45 koz increase in jewellery demand, which included a 20 per cent increase in India, following heavy promotion of men's platinum jewellery.
Third quarter industrial demand decreased by 10 koz and investment demand was 50 koz lower this quarter as Japanese investors eased back on their platinum bar and coin purchases.
Today's report also includes a complete forecast for 2017, which estimates that the platinum market deficit will continue next year, marking the sixth consecutive year of market deficits.
Total platinum supply in 2017 is forecast to fall 2% to 7,745 koz, with mining supply expected to be flat year-on-year in 2017 at 6,000 koz, and platinum recycling expected to decline to 1,745 koz (down 6 per cent year-on-year). Recycled platinum from autocatalysts is expected to stay relatively flat, while global jewellery recycling is projected to drop by 120 koz, as recycling in China returns to a more typical level.
Total platinum demand in 2017 is also forecast to fall 2 per cent year-on-year to 7,845 koz with projected growth in jewellery demand unable to offset expected declines in automotive, industrial and investment demand.
Automotive demand for platinum is expected to dip by 1 per cent to 3,360 koz in 2017, due to a slight decline in autocatalyst demand.
Jewellery sales are expected to grow in 2017 by 2 per cent, supported by strong demand in India.
Lower requirements for use in petroleum refining, chemical catalysis and glass fabrication are estimated to reduce industrial demand 6 per cent to 1,610 koz next year.
Total investment demand is projected to be 250 koz next year due to healthy demand for bars and coins and a modest increase in ETF holdings.
We hope you find this quarter's report supportive to your efforts to assess and better understand the platinum market, and ultimately make better informed investment decisions. As always, we welcome your thoughts regarding additional insights and research that the WPIC can instigate in the coming months.
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