Platinum Market in Deficit in 2007

The platinum market was in deficit by 480,000 ounces in 2007, according to the “Platinum 2008” report released by Johnson Matthey in mid-May of 2008.

Global supplies reached 6.55 million ounces, while demand for the precious metal increased by 8.6 percent to 7.03 million ounces, according to the company.

Disruption in South Africa drove demand down, while platinum's increased use in autocatalysts and industry remained strong as demand for jewelry fell marginally under pressure from a 35 percent increase in price.

The unscheduled closure of mining operations, safety problems and difficult industrial relations affected the South African supply of platinum, which fell by 4.9 percent to 5.04 million ounces.

However, autocatalysts enjoyed increasing sales, with the sector purchasing 8.2 percent more platinum in 2007.

Diesel vehicles fitted with platinum-based exhausts continued to increase. Although palladium is being used ahead of platinum in some catalytic converters, the demand for platinum remained strong for this application in 2007.

The jewelry market remained resilient despite tough conditions, and purchases fell marginally to 1.59 million ounces, according to Johnson Matthey. Manufacturing of jewelry in China increased from 760,000 ounces to 780,000 ounces in 2007.

However, Johnson Matthey says it expects platinum prices to remain volatile as a result of the power-supply crisis in South Africa and the temporary closure of the Amandelbult mine because of flooding.

"With industrial and automotive demand expected to remain strong and supplies set to underperform, the platinum market is likely to be in a substantial deficit in 2008," according to “Platinum 2008.”