Platinum, palladium shortage most in a decade on supply drop

Russian Stockpiles

Palladium sales from Russian inventories, a state secret, will slip 68 percent to 250,000 ounces this year and will account for most of the remaining reserves, Johnson Matthey said. Recycling, adding to supply, will fall 11 percent to 1.83 million ounces of platinum this year and slip 4.5 percent to 2.24 million ounces of palladium, the company forecast.

“Assuming we do see sustained higher prices during 2013, we could well see an uptick in recycling as metal that’s been held onto this year comes back to the market,” Butler said.

There may be 200,000 to 300,000 ounces of platinum and the same amount of palladium in stockpiles from old autocatalysts, Lucy Bloxham, a senior market analyst at Johnson Matthey, said in a presentation in London today. That metal would eventually come back to the market through recycling, she said.

A 9.9 percent jump in platinum jewelry usage and purchases through exchange-traded products will cut the drop in overall demand this year to 0.3 percent, the report showed. The amount used in engine-based machinery not designed for roads will total 130,000 ounces, Johnson Matthey said. Traditional autocatalyst consumption will fall 1.1 percent to 3.07 million ounces of platinum as declines in Europe outweigh gains in China, Japan and other emerging nations, the report showed.

Pollution Control

The canisters have honeycomb-like surfaces converting emissions into less harmful substances. Carmakers typically use more palladium for gasoline engines and more platinum for diesel types. They’ll raise the amount of palladium used in the devices this year by 7.5 percent to a record 6.48 million ounces, said Johnson Matthey, the maker of one in three autocatalysts.

“For palladium, we see some further growth in autocatalyst demand,” Butler said. “Technology changes next year driven by environmental legislation are expected to result in some additional demand for platinum in Europe, despite the weakness in the European car market.”

Electrical demand for palladium will slide 12 percent to 1.21 million ounces and jewelry buying will drop 11 percent to 450,000 ounces, the researcher said. Investors will add 385,000 ounces this year, compared with sales of 565,000 ounces in 2011. Platinum investment will rise 30,000 ounces to 490,000 ounces.

Rhodium Shortage

Rhodium will move to a 43,000-ounce shortage, the most since 2005, from last year’s 139,000-ounce glut, on lower supply from South Africa and more demand from vehicle manufacturers, Johnson Matthey said. The commodity is mainly used in catalytic converters and also in the chemical and glass industries. It’s down 18 percent this year at $1,150 an ounce, according to Johnson Matthey prices on Bloomberg.

Ruthenium consumption will slip 20 percent to a three-year low of 770,000 ounces as chemical purchases slow. It’s mostly used for coating computer hard disks. Demand for iridium, used in spark plugs and for growing metal oxide crystals, will slump 35 percent to a three-year low of 218,000 ounces, it said.

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