Platinum facing 2013 deficit on record demand

LONDON, England - The global platinum market will likely remain in deficit in 2013 as record demand outpaces flat supplies, a study showed on Tuesday.

"The deficit in the platinum market is forecast to increase in 2013 to 605,000 ounces, from 340,000 ounces in 2012," industrials group Johnson Matthey said in a market review.

Demand for the precious metal was forecast to surged by 4.9 percent to an all-time high of 8.42 million ounces.

The group predicted that platinum supplies would rise just 1.6 percent to 5.74 million tonnes in 2013, as rising Zimbabwean output offset strike-hit production in South Africa.

Recycling of platinum, which along with sister metal palladium is used to make jewellery and catalytic converters in cars, was meanwhile forecast to rise to 2.08 million ounces.

Johnson Matthey added that booming industrial demand would more than offset weaker demand from the automaking and jewellery sectors.

The group said the platinum market had suffered production losses of about 100,000 ounces in the first half of the year, owing to one-off factors such as strikes and safety stoppages, particularly in key producer South Africa.

Further strikes or stoppages in the final quarter of the year could potentially eliminate any increase in South African platinum supplies, it added.

British platinum miner Lonmin on Monday said it had swung back into an annual net profit, recovering from a violent strike at its Marikana platinum mine in South Africa.

Last year, Lonmin faced strikes sparked by a police crackdown at Marikana that left 34 people dead.

South Africa's mining industry is still recovering from a wave of violent strikes last year. Impromptu strikes in the sector are frequent and are often linked to union rivalry, working conditions and wages.

Turning to palladium, Johnson Matthey forecast that metal would experience a narrowing in its deficit.

"Palladium demand is expected to decline in 2013 but the market will remain undersupplied," the group noted.

Johnson Matthey predicted that the market will be in a "substantial" deficit of 740,000 ounces in 2013, as demand continues to outpace supply.

Palladium demand was forecast to dip four percent to 9.63 million ounces. Supply was expected to decline 1.5 percent to 6.43 million ounces, while recycling was seen growing seven percent to 2.40 million ounces.