Platinum market deficit set to shrink in 2017 - WPIC
* Platinum market expected to see 100koz shortfall next year * Diesel share of European car market tipped to fall * Bar, coin investment seen weakening in 2017 By Jan Harvey LONDON, Nov 22 The platinum market deficit will shrink to its narrowest since 2011 next year, the World Platinum Investment Council said on Tuesday, as a drop in investment and diesel's waning share of the European car market pressure demand. The WPIC also cut its expected platinum market shortfall for this year to 170,000 ounces from the 520,000 ounces predicted in September, citing a larger than expected drop in Chinese platinum jewellery demand, and higher recycling. That deficit will likely shrink to 100,000 ounces in 2017, it said, cutting above-ground stocks of the metal to 2.045 million ounces by the end of next year, the WPIC said. "It's all good and well to say that metal is available from above-ground stocks, but as soon as the vaulted holdings aren't for sale, any deficit makes for concern, especially from industrial users," the WPIC's director of research Trevor Raymond said. Autocatalyst demand is expected to decline 1 percent next year, the WPIC said, as diesel's overall share of the autocatalyst market shrinks. Demand for platinum for use in catalytic converters was flat this year, it said, in the face of concerns that last year's Volkswagen emissions scandal would dent demand for diesel cars, which use a higher loading of platinum in their autocatalysts. "At the moment, the 2016 percentage of diesels on European roads is 50 percent. Our forecast for next year includes a 48.5 percent diesel share, so that's a fairly aggressive fall," Raymond said. There has also been a move to other forms of emissions control technology, he said. Investment in platinum, which is expected to have risen 15 percent this year on the back of strong coin and bar demand, particularly in Japan, is forecast to fall by more than a quarter next year, the WPIC said. It expects bar and coin investment to lighten, and demand for platinum-backed exchange-traded funds, which tailed off recently after a strong start to the year, to be little changed. Overall platinum demand is tipped to fall 3 percent this year to 8.04 million ounces, the WPIC said. Jewellery demand is expected to slip by 10 percent, or 300,000 ounces, as buying in number one consumer China drops for a second year. On the supply side of the market, refined production by mining companies is predicted to have fallen 3 percent this year. The WPIC revised up its forecast for recycled platinum supply this year to 1.86 million ounces from 1.745 million in September, due chiefly to rising jewellery recycling in China. PLATINUM SUPPLY/DEMAND ('000 OZ)* 2015 2016 2017 (f) (f) Refined production 6,150 5,970 6,070 Change in producer inventory 45 40 -70 Total mine output 6,195 6,010 6,000 Recycling 1,710 1,860 1,745 TOTAL SUPPLY 7,905 7,870 7,745 Automotive demand 3,395 3,390 3,360 Jewellery 2,880 2,580 2,625 Industrial 1,685 1,720 1,610 Investment 305 350 250 TOTAL DEMAND 8,265 8,040 7,845 Balance -360 -170 -100 Above-ground stocks 2,315 2,145 2,045 * Source: World Platinum Investment Council, Platinum Quarterly Q3 2016
