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The global platinum market, which recorded a surplus of 490 000 ounces in 2013, is expected to fall into a deficit this year mainly due to the ongoing strikes in South African mines, an industry consultancy firm has said. South Africa is the leading producer of the metal in the world, accounting for about 70 percent of global supply.

In January this year more than 70 000 South African mine workers went on strike at Anglo American Platinum, Impala Platinum and Lonmin which together account for almost 50 percent of world production.

In its 2014 platinum and palladium survey released recently, Thomson Reuters GFMS said an estimated 10 000 ounces of platinum production and 5 000 ounces of palladium are lost each day the strikes in South Africa drag on.

“Total lost output now tally some 600 000 ounces with a further 300 000 ounces even after the strikes stop as a result of absenteeism, underground ‘safe-start’ preparation, re-training and ramp-ups.

“Those factors are likely to contribute more than 300 000 ounces in lost output. Palladium losses are estimated at 450 000 ounces,” it said.
GFMS said the conflict between Russia and Ukraine have also provided additional concerns around supply, in that there is a chance that Western diplomatic measures could see a broader emplacement of sanctions on Russia that may threaten the continuity of export of platinum and palladium.

It, however, said the strikes in South Africa had not yet resulted in higher prices for the metal, but an increase would be noticed in the second half of the year.

“The protracted strike in South Africa has not fed through to noticeably higher prices thus far this year, but is expected to lead to increases in the second half-year – even if the strike comes to an end soon,” it said.

GFMS however noted that platinum recycling could play a key role in balancing the market next year due to uncertainties in supply from South Africa.

In 2012, the global platinum market suffered a 400 000 ounces deficit.
Global demand for the commodity has dipped over the years as effects of the global financial recession took hold on leading automobile industries who either closed shop or cut back on operations.

Platinum and its sister metal palladium are mostly used in motor vehicle catalytic converters and in jewellery manufacturing. – New Ziana.