mining weekly article.. you all may have seen... however
Asian demand kept platinum industry afloatin 2009
During 2009, a year that took a toll on theplatinum market, significant jewellery demand from China and Japan keptthe platinum industry afloat amid significant fears of a market crash.
Last month, Investec Asset Management reported that significantbuying of platinum took place in China in 2009, which was up 105% on2008 platinum sales figures, and in Japan, which was up by 464% on 2008platinum sales figures. Although this seems beyond normal levels,Investec did acknowledge that this demand was not pure jewellery demandin the traditional sense but rather a hybrid of jewellery buying andinvestment demand.
Global precious metals consultancy GFMS CEO Paul Walkeragreed and reported at the release of the company’s annual ‘Platinumand Palladium Survey’ that real jewellery growth in Japan grew by lessthen 10%. “When GFMS releases figures, such as jewellery growth, thecompany only takes into account the metal that was taken out of theground, refined and produced into the end product. The companycalculates investment demand separately,” said Walker. Even taking thisfigure into conside- ration, Walker cautioned that the Japanese growthfigure reported by Investec was “excessively high”.
Investec also reported that, while the Asian market saw an increase,jewellery sales in Europe and North America depressed as the consumerluxury spending ability was curtailed by the global economic crisis.This trend continued into the first half of 2010.
During 2009, the platinum market was characterised by supplyconstraints from South Africa, which had a large influence on theplatinum market, accounting for 78% of supply. These supply constraintswere mainly driven by the energy crisis that rocked South Africanindustry in 2008 and then the global financial crisis.
The question whether this would be the case again this year remained amystery; however, Walker reported that there should not be supplyconstraints.
“Unless there is a major crisis to the extent of [the 2008] powercrisis, the market should not experience supply constraints. Theincreased tariffs announced by Eskom might make producers more cautious;however, increased demand from the automotive sector would offsetthis,” said Walker. Undoubtedly, the success story in the palla- diummarket was the increased new-vehicle sales in China, which sold1,74-million new vehicles in March this year, setting a new record.
Growth of passenger car sales grew by 64% year-on-year, whilecommercial vehicle sales grew by 39% year- on-year. Walker reportedthat, with Chinese regulatory hurdles and diesel quality issues limitingthe penetration of diesel into the passenger and light commercialvehicle market, the con- tinued growth of the Chinese car marketresulted in implicit growth of petrol-powered vehicles, for which theautocatalysts were largely biased towards palladium over platinum.
Looking forward, Walker said that, although the platinum market wouldremain in surplus this year, it would not reach the levels experiencedin 2008. He added that investor demand would be key to the performanceof this market with a price high of $1 900/oz entirely possible.