Escalation of the euro zone sovereign debt crisis in 2011 resulted in an excess supply of platinum in the market, which led to a decrease in the prices of the metal.
Online PR News – 23-November-2012 – 22/11/2012 Seoul/Korea – Escalation of the euro zone sovereign debt crisis in 2011 resulted in an excess supply of platinum in the market, which led to a decrease in the prices of the metal. The prices of platinum, which have historically remained above the prices of gold, declined to lower than the gold prices in September last year. However, supply-side concerns in South Africa and improving global motor sales helped platinum prices to overtake gold prices in the second half of 2013, but the average for 2012 remained below the average gold price.
Platinum can be traded on Haffkin-Roth electronic platform with the symbol PL_67.
The demand outlook for 2012 (decreasing to 6.0Moz, from 6.1Moz in 2011) is moderately negative due to the slowdown in China, recession in the euro zone and swing toward palladium substitution. However, supply constraints are expected to strongly impact pricing. About two percent of the global supply of platinum has already been lost due to an employee strike in South Africa in the first quarter of 2012. Haffkin-Roth also quoted Statistics South Africa, stating that, in the month of February 2012, mines in South Africa produced 48 percent less platinum group metals (PGM) because of the strike and safety-related closures. While short-term demand for platinum remains uncertain, analysts believe that the demand will sustain in the long run and, with supply that might continue to disappoint, the market is expected to go into deficit.
According to the consensus estimates, platinum prices are expected to average ~US$1,600/oz in 2012 and ~US$1,780/oz in 2013, Haffkin-Roth forecast.
Auto demand plays an important role in the physical demand for platinum globally and, in 2011, represented 38 percent of the global demand. Reduced output for auto catalyst in 2011 resulted in lower demand for platinum; however, an earlier than expected recovery in Japan and higher sales of diesel cars in the US brought back the production levels for auto and auto parts.
Demand for jewelry represented 31 percent of the global platinum demand in 2011. The demand has historically been highly price elastic. Low prices in the late 2008 and in 2009 led to a notable increase in the demand for platinum jewelry while higher prices in 2010 resulted in a considerable fall.
Industrial demand for platinum from growth industries, such as glass, electronics, petroleum and chemical industry, remains sedate even when there is an economic slowdown (unlike the auto industry). As a result, industrial demand is expected to grow at a stable pace in the coming years.
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