Supplies of platinum will outpace demand in 2005, putting the market in surplus for the first time for six years and weighing on the metal's price, a closely watched report said Tuesday. Rising output will lead to a "slightly softer" platinum price within a range of 760-880 dollars per ounce over the next six months, London-based Johnson Matthey said in a quarterly update of its Platinum Review.
Prices averaged 845 dollars an ounce in the first 10 months of 2004, up 25 percent from the same period of the previous year.
In 2004 platinum demand is set to grow by less than one percent, taking the market close to balance, the report predicted.
Total platinum demand is expected to rise by 50,000 ounces this year to 6.47 million, with increased demand from the automobile and glass industries largely offset by weak purchases by jewellery manufacturers.
Supplies are forecast to grow by 230,000 ounces in 2004 to 6.43 million, leaving the market in deficit by 40,000 tonnes, as higher output from Canada and South Africa more than compensates for reduced Russian sales.
As for palladium, the market is expected to remain in surplus in 2004 to the tune of one million ounces, with the surplus likely to continue into 2005.
Palladium is forecast to trade between 160 and 250 dollars for the next six months, having been largely mired below 240 dollars so far this year.
Palladium demand is seen rising by 730,000 ounces to 6.14 million in 2004, helped by rising purchases from the auto industry and the introduction of palladium jewellery in China.
Supplies are set to increase by 700,000 ounces to 7.16 million, driven by a marked rise in Russia sales as Stillwater brings to market the stock of palladium it acquired from Norilsk Nickel in 2003, the report said.