Platinum and Palladium Survey 2009

Precious metals consultant GFMS, based in London, has released its “Platinum & Palladium Survey 2009,” its sixth major report on these markets.

The survey’s main finding is that platinum’s gross surplus more than tripled in 2008, to over 260,000 ounces. The report ascribed that to the collapse in global vehicle sales, which negatively affected autocatalyst fabrication. Autocatalysts account for around half of platinum demand. A second key factor was a slump of more than 10 percent in jewelry fabrication, primarily because of high prices and mainly in the first half. But the report predicts a recovery in the fourth quarter because of much lower prices. 

GFMS figures on total platinum supply actually rose. Mine production was still reported to have fallen in 2008, by 7 percent. In contrast, GFMS estimates that palladium’s gross deficit almost doubled in 2008, to nearly 650,000 ounces, chiefly because of a drop in mine supply, one that was proportionately larger than for platinum. 

On the demand side, the survey notes that palladium benefited from further substitution for platinum in autocatalyst uses, but lower vehicle output still meant a 6 percent drop in this area. Demand for palladium in jewelry was slightly higher, with offtake in the Chinese market up marginally and gains made in the U.S. market where palladium jewelry remains at an early stage of development. The report noted losses for palladium’s use in the production of white gold alloys. 

Despite these developments, GFMS believes that the reason the annual average palladium price fell last year was because of more-generous above-ground stocks of the metal and a rise in inventory sales by the Russian government, which left the metal with a residual surplus of almost 260,000 ounces.