Platinum set to fight back

Platinum is expected to claw higher later in 2015 after sliding below $1,000 an ounce for the first time in more than six years, as a tightening market balance finally starts filtering through into prices. A survey of 30 analysts and traders returned an average forecast for the white metal of $1,156 an ounce this year, slightly above its year-to-date average of $1,143 an ounce. The poll saw the metal bottoming out at $1,105 this quarter, before rising to $1,180 in the last three months of this year. The forecasts were made before platinum slid to six-year lows this week.
Spot platinum is currently near $975 an ounce, hobbled by a perception that supply remains plentiful despite a historic labour stoppage in South Africa while autocatalyst demand struggles to return to pre-financial-crisis levels. The metal is also suffering from a sharp drop in gold prices on the back of a rising dollar and expectations for an increase in US interest rates.
"The realisation of the true extent of above-ground stockpiles appears to be a key factor, coupled with concerns of falling diesel car sales, particularly in Europe, as politicians seek to demonise diesel vehicles over NOx (nitrogen oxide) emissions," Fastmarkets analyst James Moore said. "It may be some time before is finally reflected in prices, but the timescale lies firmly in the hand of producers, as weakening prices eat further into their cost curve."
Next year the white metal is seen averaging $1,253 an ounce, recovering from its 2015 nadir but well below its 2014 average of $1,378 an ounce. While supply from South African mining has risen after last year's unprecedented five-month strike, it is likely to remain curtailed in the longer term as lower prices threaten to force shaft closures and cuts to capital expenditure.
Palladium prices are also expected to bottom out in the third quarter at an average $714 an ounce, rising to $760 in the fourth quarter. It is expected to maintain its average for the year so far of $756 an ounce in the full year, before rising to $820 in 2016. It dropped sharply earlier this month with gold and platinum to touch its lowest since late 2012 at $593 an ounce. It is currently around $620.