Platinum was again centre of the precious metal stage as refiner and distributor Johnson Matthey predicted the industrial turmoil in South Africa would see demand outstrip supply in 2012.
In its “Platinum 2012 Interim Review”, Johnson Matthey said the problem in South Africa will lead to a 10% drop in worldwide platinum supplies to 5.84 million ounces.
Gross demand is predicted to remain steady, at 8.07 million ounces and coupled a decline in recycling will push the market into a deficit of 400,000 oz.
South African output is set to fall by 12% year-on-year to 4.25 million ounces, an eleven-year low.
Lost production due to the strikes and safety stoppages are said to be at least 300,000 oz so far, with strikes still crippling a number of mines. Closure of the least efficient mines and production problems elsewhere will also hit output this year.
Demand from car makers for catalytic convertors is set to weaken and industrial demand generally fall by 13% but offsetting are buoyant consumer sales of jewellery in China and India. Jewellery demand is set to hit a new three-year high of 2.73 million ounces.
In 2013, Johnson Matthey expects gross platinum demand to see modest growth, with steady autocatalyst demand and a recovery in industrial purchasing but it sees little improvement in the supply situation in South Africa with output set to remain flat at 4.25 million ounces.
Underlying the tough conditions in South Africa, platinum Lonmin today pleaded with shareholders to back its US$817 mln rescue rights issue.
The miner, which has been at the centre of troubles in South Africa, warned today that without the rights issue it would be in a “highly vulnerable position” with regard to its bankers and to another approach from its 25% shareholder Xstrata.
Xstrata’s proposal would have seen it reverse its South African platinum business into Lonmin, in return for a 70% share of the combined entity. Lonmin said it would consider any revised proposal that Xstrata wishes to make on its merits.
In August, 34 striking miners were shot dead by police during a protest outside Lonmin’s Marikana mine on the worst day of the unrest.
The price of platinum rose by US$16 to US$1,577. Silver rose to US$32.14 and gold eased US$4.78 to US$1,723.17.
Major movers
Randgold Resources (LON:RRS) down 100p at 6,850
African Barrick Gold (LON:ABG) down 5.3p at 403.7p