Hello Crudestope
On the wire this A.M.
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FOCUS-Platinum and palladium in deficit in 1999-JM
(Adds detail, background throughout)
By Marius Bosch
LONDON, Nov 16 (Reuters) - The world platinum market is seen recording its biggest ever deficit in 1999 with demand exceeding supply by more than 10 percent due to erratic supplies from Russia, Johnson Matthey Plc said on Tuesday.
The precious metals refiner added that sister metal palladium would see record high demand of 8.3 million ounces this year, exceeding supply by 630,000 ounces.
Johnson Matthey said in its annual Platinum 1999 Interim Review that platinum demand was at a new high of 5.59 million ounces boosted by a 38 percent surge to 850,000 ounces in Chinese jewellery demand.
"It is the biggest deficit we have ever recorded in the platinum market.
"It does depend an awful lot on the Russians and it is caused entirely by the Russians," said Jeremy Coombes, Johnson Matthey's General Manager, marketing.
The review said Russian platinum sales are expected to reach 800,000 ounces this year, down from 1.3 million ounces in 1998.
RUSSIAN SUPPLIES COULD BE LOWER
Platinum exports from Russia ceased after the first few months of 1999 due to legislation put in place last year which restricted platinum-group-metals exports to authorised "State Organs."
Russia's sole PGMs exporter, Almazjuvelirexport, did not fit the description and neither did any other Russian organisation.
"We have assumed that the Russian issue will be resolved in time for exports to recommence before the end of 1999. If this does not happen the Russian supply figure will be less than 800,000 ounces and the price could exceed the upper limit of our range," the review said.
It said part of the deficit would be met from sales by the U.S. Defense Logistics Agency (DLA) of metal that has been accumulating in the U.S. strategic stockpile.
Johnson Matthey said it expected platinum to trade in a $370-$440 range in the next six months.
Mine supply from the world's biggest producer South Africa is seen rising by 140,000 ounces to 3.82 million ounces.
The review said platinum jewellery fabrication is rising in all regions, with Chinese jewellery demand expected to increase by 230,000 ounces this year, but higher industrial demand had been offset by the declining use of platinum in catalysts in the automobile industry.
Autocatalyst demand is expected to be 1.75 million ounces, 70,000 ounces down on the previous year due to increased substitution of platinum by palladium.
Industrial use of platinum is forecast to rise by 90,000 ounces to 1.34 million with the use of platinum in computer hard drives the most rapidly growing application.
PALLADIUM DEMAND AT NEW HIGH
Supply from the world's largest palladium producer, Russia, is seen declining by 800,000 ounces to five million ounces this year.
As with platinum, the Russians also held the key to the palladium market.
"The level of Russian exports is key to determining future prices," Johnson Matthey said.
The review said demand in the automobile industry is forecast to increase by 11 percent to 4.89 million ounces.
Demand in the dental and electronics industries should drop by six percent and 11 percent respectively this year, mainly due to substitution of palladium as a result of high metal prices.
Johnson Matthey expected the price of palladium to range between $350 and $400 an ounce in the next six months.
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November 16, 1999 08:35
INTERVIEW-China drives platinum jewellery demand
By Jae Hur
TOKYO, Nov 16 (Reuters) - Booming demand in China for fashionable white metal rings and pendants is brightening the outlook for platinum in the global jewellery market this year, Johnson Matthey Plc said on Tuesday.
A recovery in Japan and steady demand in Europe and the United States will also help boost the jewellery industry's global consumption of platinum, Johnson Matthey said.
In its latest report the UK precious metals refiner said it expected global demand for platinum from jewellery manufacturers to reach a record 2.73 million ounces in 1999, up 320,000 ounces from last year. The rise is mainly due to a sharp increase in Chinese consumption, Michael Steel, market research director at Johnson Matthey, told Reuters in an interview.
China's demand for platinum in jewellery is likely to jump to more than 850,000 ounces this year from 620,000 ounces in 1998, Steel said.
"China has dominated the jewellery market in the last two or three years in terms of growth," Steel said. "Five years ago, Chinese demand for platinum jewellery was almost zero."
Young people in China are choosing platinum jewellery because they see it as a modern fashion symbol that sets them apart from their parents' generation -- an era of communist domination and yellow gold, Steel said.
Also, more people in China are now relatively wealthy and can afford to buy platinum, Steel said.
Another, perhaps less important, reason is that restrictions on who is allowed to manufacture gold jewellery in China have created an opportunity for platinum.
Steel said manufacturers were taking a long-term view of the rising trend and had invested heavily in new equipment in the last five years.
He said that in his opinion, China had already bought most of the estimated 850,000 ounces it needs this year by the end of September before a rally in platinum prices accelerated further.
"We are looking at the final quarter of this year being very quiet in terms of China's platinum demand," he said.
The surge in platinum will also dampen new demand by depressing jewellery makers' profit margins unless the authorities approve an increase in the retail price of jewellery, Steel said.
Japan's platinum demand for jewellery is expected to rise to 1.32 million ounces this year from 1.29 million ounces in 1998, according to Johnson Matthey.
It expects platinum demand in North America's jewellery sector to climb by 20 percent to 300,000 ounces, with European demand set to rise to 170,000 ounces from 160,000 ounces.
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