CPM Group Releases Platinum Group Metals Yearbook 2014

CPM Group Releases Platinum Group Metals Yearbook 2014

24 Jun 2014


CPM Group Releases Platinum Group Metals Yearbook 2014

NOTE: Both printed, hard-bound and electronic copies of the Platinum Group Metals Yearbook 2014 are available for purchase by the general public and are free to the press. These reports may be requested by the press in Acrobat PDF format prior to the release time of 9:00 a.m. EDT on 24 June 2014, but they are to be treated as embargoed until that release time. Journalists may request reports at press@cpmgroup.com.

New York, NY, 24 June 2014. The PGMs market received a temporary reprieve from labor unrest and violence in South Africa for the most part of 2013. This enabled major South African platinum producers to deepen mine restructuring efforts and raise metal output from their operations. The platinum market reversed to a small surplus of total new supply relative to fabrication demand last year, from a large deficit in 2012. Despite this improvement in platinum supplies, the most important part of the wage negotiation in South Africa was left unsettled in 2013.

By the end of last year discussions with the Association of Mineworkers and Construction Union (AMCU), the majority union at Lonmin, Impala, and Anglo Platinum, did not yield any wage agreement. This set off the largest labor strike in the history of South Africa platinum industry in January 2014. The platinum industry is expected to see the largest deficit ever this year as a result of the strike, and face continuing restructuring and other issues in the coming years. CPM Group’s Platinum Group Metals Yearbook 2014 provides in-depth analysis of the events that occurred in 2013 and 2014, as well as their implications for the PGM markets.

Platinum fabrication demand declined to 7.2 million ounces in 2013, down 1.8% from 2012. This was the first decline in platinum fabrication demand since 2009, when the Great Recession drove platinum fabrication demand down 6.9% to 6.91 million ounces. Platinum fabrication demand during 2013 was the lowest since 2010. Platinum fabrication demand was driven lower during 2013 primarily by weaker consumption of platinum jewelry, which is a highly price-sensitive source of demand. Demand for platinum jewelry declined in major markets including China, Japan, the United States, and Europe. Weakness in jewelry demand was offset, to some extent, by strength in platinum demand from the auto sector, which accounts for around 45% of total fabrication demand. Auto sector demand rose to 3.24 million ounces in 2013, up 2.8% from 2012. Ongoing strength from the auto sector coupled with renewed strength in demand from the jewelry sector is helping boost total platinum fabrication demand during 2014.

In the palladium market the surplus of newly refined palladium over fabrication demand totaled 343,329 ounces last year. This was an increase from the strike-affected surplus of 25,000 ounces in 2012. Investors likely purchased most of these inventories, which helped boost palladium prices during 2013. Healthy fabrication demand for palladium, especially from the auto sector, coupled with ongoing concerns regarding supply stimulated investor buying. Some of the inventory buildup in 2013 could be attributed to South African producers that were building inventories in advance of the strike that started in January 2014 and other commercial market participants that absorbed the remainder of the surplus in 2013.

Total palladium supply rose to a record 9.2 million ounces in 2013, up 6.7% from 2012. This increase was driven primarily by a sharp increase in secondary supply of palladium during the year. Secondary supply of palladium rose strongly in 2013, up 16.2% from the previous year to a record 2.36 million ounces. A recovery in the auto market, an increased amount of palladium in the auto catalysts available for recovery, and an increase in palladium prices during 2013 all helped bring into the market significant levels of palladium from secondary sources.

Palladium fabrication demand rose for the fourth consecutive year in 2013, reaching a record 8.80 million ounces. This was an increase of 3.0% from 2012 levels. The primary driver of palladium fabrication demand growth during 2013 was auto demand.  Strong demand in key markets such as North America and China helped push demand from this source higher. The European auto market, which also is an important source of palladium fabrication demand, began to show signs of improvement in 2013, which has continued into the first half of 2014. Palladium demand from the electronics sector, the second largest use of the metal, rose to its highest level since 2000 in 2013. 

The deficit in the rhodium market declined to 23,687 ounce in 2013, down from 36,797 ounces in 2012. This deficit weighed on prices, however, as it suggests the offloading of inventories by dealers and investors meeting fabrication requirements.

One of the biggest threats to PGM prices is the large overhang of above ground stocks. The 2014 Yearbook discusses CPM Group’s estimates of global PGM inventories. Investors are the largest holders of these inventories; it is clear that investors have been selling metal from inventories in 2013 and the first half of 2014, a subject covered in the report.

The Platinum Group Metals Yearbook 2014 will be translated into Chinese and distributed within China. CPM Group has partnered with the China Gold Association, China National Gold Corp., and Jing Yi Gold Ltd. to produce this version of the yearbook.

This year's report would not be possible if it were not for our sponsors, to whom we are extremely grateful. This year they are: CME Group, Commodities Now, The Institute of Scrap Recycling Industries, Inc., Kitco Metals Inc, Monex Precious Metals, NOAH Capital Markets, Sabin Metal Group of Companies, Umicore, Wellgreen Platinum Ltd., The China Gold Association, China National Gold Corp., and Jing Yi Gold Ltd.

CPM Group’s Platinum Group Metals Yearbook 2014. Available in printed and/or PDF format. US$150.00. Available from CPM Group. 30 Broad St., 37th Floor. New York, NY  10004 Tel. 212-785-8320. Fax: 212-785-8325. email: info@cpmgroup.com. The report may be ordered and downloaded online at the CPM Group Store.

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