World palladium demand is expected to slump by 24 percent this year, mainly due to end-users switching to cheaper metals in the volatile market, according to Johnson Matthey, a precious metals refiner. The decline would bring palladium to a five-year low.
Palladium demand in the auto sector, where the metal is used for autocatalysts, is expected to fall by 14 percent to 4.84 million ounces in 2001, the lowest level for three years.
In the electronics industry, demand is seen shrinking by more than 50 percent to a 19-year low of 1.05 million ounces.
``The broad conclusions reached in the report are as we read them as well,'' Keith Rumble, CEO of Impala Platinum Holdings ltd., the second largest platinum producer in the world.
``We might have differences on the magnitude of numbers but the broad conclusions are correct,'' he said.
Car makers reduced consumption and drew on stocks built up in earlier years, Johnson Matthey said in its platinum 2001 interim review. The recovery of palladium from autocatalyst scrap is expected to rise by 26 percent to 290,000 ounces in 2001, denting fresh purchases further, it said.
Thrifting is also expected to continue in the electronics industry, with further adoption of nickel pastes for the electrodes layers in multi-layer ceramic capacitors. A spectacular slump in capacitors sales compounded the picture.
Dental demand is forecast to fall by 16 percent to 690,000 ounces this year, in line with a trend recorded in Europe and the United States over the past three years to move away from palladium-based dental alloys.
``Paradoxically, despite these negative trends, it is possible that palladium demand could increase in 2002,'' the review said.
The refiner said increasingly tough legislation on vehicle emissions in the United States and Europe would help to maintain demand for palladium in auto catalysts close to current levels.
``The auto and electronics industries have consumed large quantities of palladium from stocks during 2001 and fresh purchases of metal could therefore be higher next year,'' it said, adding that lower prices may encourage a limited return to palladium based-dental alloys.
Prices hit all-time highs the beginning of this year over concerns of exports from Russia, which produces two-thirds of the world’s palladium.
Russian shipments of palladium are forecast to decline to 4.6 million ounces in 2001, the lowest since 1995.
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Johnson Matthey said that although data showed almost 4.5 million ounces had been shipped to Switzerland and the United States, it appeared only part of that metal had been sold.
Senior officials in Moscow recently said Russia would stop selling palladium at present prices but analysts feel the move would have little impact on the market.
In 2001, supplies from South Africa, another major producer of palladium, are expected to rise by 8.0 percent to two million ounces, in line with expansions in the mining sector. Reuters.
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