PLATINUM WEEK-Russian palladium stock sales to be smaller -JM

Mon May 13, 2013 6:00am EDT

* Russian state sales in 2012 estimated at 250,000 oz

* Expected to drop to around 100,000 oz this year

* Norilsk 2013 palladium output to decline slightly

By Polina Devitt

MOSCOW, May 13 (Reuters) - Sales of palladium from Russian state stocks are likely to contribute less to supply this year and "in the foreseeable future" than they did in previous years after falling by two-thirds in 2012, Johnson Matthey said.

Sales of Russian state stocks have helped keep the palladium market in surplus for eight of the last 10 years. Stocks at the Gokhran state repository are almost depleted following those exports, platinum refiner JM said on Monday in its Platinum 2013 report.

JM said it believed there might be some residual sales of metal in 2013 but at much reduced levels of around 100,000 ounces. That low level is likely to leave the market in a structural deficit, potentially pushing prices higher.

"What has been gleaned in the last few years supports a growing consensus ... that sales from stocks in 2013 will be less than half of the 2012 level, which was itself sharply down on earlier years," the company said.

JM estimated that sales of palladium from government-controlled inventories fell to 250,000 troy ounces in 2012 from 775,000 ounces the previous year.

"If this outlook is correct, the overall supply of primary palladium in 2013 will probably fall, as it is unlikely that new production this year will be able to compensate for the predicted drop in sales of palladium from Russian state inventories," the refiner added.

Production of platinum group metals from Norilsk Nickel's Russian operations, the main source of palladium supply to the market, is expected to decline in 2013.

JM cited Norilsk's 2013 guidance for palladium output of 2.60-2.61 million ounces and platinum output of 640,000-650,000 ounces at its Russian divisions.

Last year its total output was 2.73 million ounces of palladium and 683,000 ounces of platinum, down 3 percent and 2 percent year-on-year respectively.

Norilsk accounts for 41 percent of global palladium output and 11 percent of platinum production.

JM lifted its estimate for Russian rhodium production in 2012 to 90,000 ounces from 70,000 ounces late last year, after Norilsk refined large quantities of stored pyrrhotite concentrate, which is relatively enriched in rhodium.

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