Johnson Matthey: Platinum Fundamentals Good

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"Platinum is likely to maintain its current level, if not go higher."

The price of platinum has fallen ~11% since hitting a 21-month high in late April.

But according to Johnson Matthey's Peter Duncan, both the supply and demand side of the market would suggest platinum is likely to maintain its current level, if not go higher during the rest of the year.

On the demand side, he said there is some uncertainty as to whether we are likely to experience a double dip but added, "I would certainly expect demand to be stronger this year in all the industrial applications than it was last year.

Supply

The big story over last week was the South African government's directive pm the bord and pillar mining technique and, more specifically, about the space between pillars.

"The producers themselves are still struggling to interpret exactly what's required and how they're going to handle it. But if you look at the overall production from the area that's immediately affected. . .I'd be very surprised if it were more than 100 Koz./year."

He still expects some modest growth in overall SA platinum supply.

Asked about other sources of supply, he says Russian and North American supply is expected to remain fairly consistent. "The growth potential, all other things being equal, is in Zimbabwe," he says, where still significant platinum reserves are growing.

Demand

While auto-sector demand still makes up around half of current usage, Duncan says the most important thing to focus on is the diesel car's share of the European market—which dipped significantly last year.

"Production fell last year; this year it will be the opposite," he says Duncan, noting jewelry accounts for 40% of the total market and believes there's a long way to go on the jewelry front. "So far we've seen significant growth in ETF investment this year," he says, "after the launch of the U.S.-based ETF fund."

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