platinum

Everything you need to know about the Platinum shortage

UK global speciality metals and chemicals company Johnson Matthey has reported a huge rise in the shortage of platinum available and a slight increase in the level of supply of palladium in the markets.

Johnson Matthey PLC is a specialty chemicals company which manufactures pharmaceutical materials, catalysts, and pollution control systems. The Company also refines platinum, gold and silver, palladium and produces colour and coating materials for the glass, ceramics, tile, plastics, paint, ink, and construction industries. Johnson Matthey has operations around the world and is seen as central to the metals investing marketplace.

Here is everything you need to know about the platinum shortage report from Johnson Matthey.

Increasing high demand for Platinum

The level of demand for Platinum has risen, against the level of supply, at the highest rate since 1999. This is because platinum is being used more and more in the chemical industry, electrical and glass sectors. Also platinum is an attractive commodity for investors, with “unprecedented offtake by investors” This refers to demand increasing because of a new rand denominated exchange-traded fund. Between its launch in April 2013 and the end of September 2013, it accumulated 660,000 ounces of platinum metal, benefiting from “considerable pent-up demand” from South African investors who are subject to limits on overseas investments.

More traditional users of platinum, jewellery and car manufacturing have actually reported less demand as both sectors have been hit by the recent economic downturn.

What will happen in the future with the platinum shortage?

The Southern African investment demand looks set to impact on the demand of the metal more and more and as the economy improves worldwide the need for cars and jewellery will increase.

The key is supply. Can supply from the mines in Russia, South Africa, North America and Zimbabwe increase to match the growing demand? In Russia mines have been hit by unscheduled repair work and union action in South Africa has reduced output. These are short term issues and should now increase supply. Zimbabwe is an embryonic market with large growth prospects.

Also with an increasing stable, long term demand for platinum from investors, companies will be keen to maximise returns so expect supply to increase quickly.

Is the demand for Palladium the same?

No. Palladium is used widely for catalytic converters for cars, and jewellery. There is not as much investment appetite as platinum and supply is still outweighing demand. Also Russia, the world’s biggest producer of Palladium has stock piled high levels of the metal, and can reduce the stock to meet demand.

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