Platinum group authority Johnson Matthey has once again revealed the state of the metal in its annual report. Highlights from the Platinum 2013 Interim Review are below, and the full report is now available to industry.

• Platinum supply will rise by 1.6 percent to 5.74 million ounces, with higher output from Zimbabwe accounting for most of the gains. Strong offtake by industrial users and investors will lift gross demand by 4.9 percent to 8.42 million ounces. Recycling will grow slightly to 2.08 million ounces.
• Platinum supply from South Africa is predicted to rise by less than 1 percent to total 4.12 million ounces in 2013. Production losses due to one-off factors like strikes and safety stoppages totaled around 100,000 ounces in the first half.
• Gross demand for platinum in jewelry will slip by 1.4 percent to 2.74 million ounces. Purchases by Chinese jewelry makers will ease this year after a very strong 2012, though higher demand is expected in Europe, North America, and India. Unprecedented offtake by ETF investors in the new Absa fund in South Africa is expected to lift investment demand by 68 percent to a record 765,000 ounces.
• Primary platinum supplies are unlikely to grow significantly in 2014. Industrial offtake will remain strong; purchasing by automakers should be boosted by new diesel emissions limits in Europe; and the outlook for jewelry demand is robust. Even with a further rise in recoveries of platinum from spent autocatalysts and a drop in investment offtake compared with 2013’s exceptional total, a third consecutive year of deficit is likely.
• Although the gap between palladium supply and demand will narrow in 2013, the market will be in deficit by 740,000 ounces. Primary supplies will drop to 6.43 million ounces, due to lower Russian stock sales, but recycling will grow by 7.4 percent to 2.46 million ounces. Palladium demand will fall by 3.4 percent to 9.63 million ounces, with autocatalyst demand up but with reduced purchases from other sectors.
• World supplies of palladium will decline by 1.5 percent to 6.43 million ounces in 2013, due to a drop in sales from Russian government stocks. There will be a marginal recovery in South African shipments of palladium, while production from Zimbabwe will rise due to mine expansion. North American output of palladium as a by-product of nickel mining will also increase.
• Palladium jewelry continues to lose market share in China, and has not established a substantial foothold in any other market. Outside of China, the use of palladium—as an alloying element in white gold and platinum alloys, and for men’s wedding bands—will be stable. As a result, demand for palladium in jewelry manufacturing will fall by 12.4 percent in 2013 to a ten-year-low of 390,000 ounces.
• Investors have shown a reduced appetite for palladium this year. Although there were significant inflows into palladium ETFs in the first two months, there was a prolonged period of disinvestment in mid-year. Net palladium investment demand is forecast to fall to 75,000 ounces in 2013, down from 470,000 ounces last year.
• Recent trends in palladium supply and demand look set to continue into 2014. Primary supply will fall in the absence of Russian stock sales, and higher auto demand will be balanced by lower jewelry purchases and further substitution in industrial applications. This leaves investment as the wild card in the overall supply-demand picture: a proposed rand-denominated palladium ETF could generate additional demand from South African investors and push the market further into deficit.

Download the entire Platinum 2013 Interim Review here. Moving forward, Johnson Matthey will no longer publish its annual report, opting instead to make its market data available exclusively to customers and contributors to its research efforts.

JCK