Johnson Matthey: Palladium Market Deficit Expected for 2012


"The global palladium market swung from a deficit to an oversupply situation last year largely due to net disinvestment, but is expected to return to a deficit in 2012, said Johnson Matthey in its 'Platinum 2012' report issued Monday."

Kitco, Allen Sykora

The International Monetary Fund (IMF) is planning to purchase more than $2 billion worth of gold on account of rising global risks. The IMF currently holds around 2800 tonnes of gold at various depositories

The report, widely followed by those in the platinum group metals business, listed a 2011 surplus of 1.26 million ounces after a 530,000-ounce deficit in 2010.

Johnson Matthey factors in investment demand—or disinvestment—when calculating supply/demand figures. And that was the primary factor fuelling the turnabout in the supply/demand balance last year, said Tim Murray, general manager for precious metals marketing with Johnson Matthey.

"There was disinvestment 565,000 (ounces) against 2010, when we had nearly 1.1 million go into investment," Murray said. "So if you actually do the math, the surplus effectively is caused by the disinvestment number in palladium....The ETFs had a large swing of just over 1.6 million ounces, basically, from positive to negative."

ETF shares trade like a stock but track the price of a commodity. Metal is put into storage to back ETF shares, meaning physical demand, but conversely metal is sold back into market when investors redeem their shares.

Autocatalyst and industrial demand for palladium rose, and Russia continued to sell palladium from government-controlled inventories, the report said.

Gross demand for palladium fell by 13% last year to 8.45 million ounces, Johnson Matthey said. . .View Full Article

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