* Palladium expected to average $740/oz in next 6 months
* Russian stock sales seen falling to 100,000 oz this year
* South African platinum output expected to remain flat
* Platinum set to average $1,570/oz in next 6 months
By Clara Denina
LONDON, May 13 (China's demand for cars and lower
Russian palladium sales should keep the world market for the
metal used for autocatalysts in deficit and send its price to
the highest since mid-2011, refiner Johnson Matthey said.
Johnson Matthey on Monday predicted a high for palladium
of $830 an ounce, a low of $635 and an average of $740 in
the next six months, up from its 2012 average of $643 and
compared with its year-to-date average of $662.
"Palladium has the strongest fundamental outlook of all the
platinum group metals," senior analyst Lucy Bloxham said.
"We are expecting further declines in supply this year,
largely as a result of reduced Russian stocks sales, while the
real driver for palladium's growth is the emerging markets,
particularly China this year."
Johnson Matthey expects Russian palladium stock sales to
slide to around 100,000 ounces this year from 250,000 in 2012.
Coupled with continued recovery in demand from carmakers,
and tighter emissions standards for gasoline light duty
vehicles, particularly in China and Russia, the supply shortfall
should help bolster palladium investment interest from
exchange-traded products (ETPs) subscribers.
This year's deficit could potentially be bigger than a
shortfall of 1.07 million ounces in 2012, which was also helped
by a 470,000 ounce inflow into palladium exchange-traded funds
(ETFs), chiefly in the United States and Europe.
"Last year there was a swing in investment of over one
million ounces (from liquidation of 565,000 ounces in 2011) and
although it's always hard to predict what it will be, ETFs
demand has been pretty good this year so far, with inflows of
around 200,000 ounces," Johnson Matthey general manager John
The platinum market could see a modest deficit in 2013,
depending on the strength of investment demand, as the European
autocatalyst market declines and primary supply increases.
There was a 375,000 ounce shortfall in 2012.
"We see a marginal increase in primary supply overall and in
South Africa this to be broadly flat from last year and that's
as the Anglo American mine closures go ahead," Bloxham
"We don't expect to see demand in auto grow because the
weakness in Europe will probably be balanced by increases in
Japan, India, U.S. light duty vehicles and continued growth of
U.S. heavy duty."
Prices should average $1,570 an ounce over the next six
months, above 2012's average of $1,552 but lower than the
year-to-date average of $1,594, Johnson Matthey said.
Platinum is expected to range from $1,415 to $1,710
"If we see strikes again during wage negotiations in South
Africa starting next month, prices have the potential to go
higher," Cullen said.
However, he noted that strikes, safety stoppages and higher
costs in 2012 had failed to propel prices to new highs.
Secondary supply is also seen increasing, with recovery of
platinum from the autocatalysts sector rebounding after some
collectors in Europe and North America hoarded inventory last
year because of lower platinum prices, Bloxham said.
On the demand side, platinum jewellery offtake is seen
slowing slightly after last year's growth, while a rebound in
industrial demand will be led by higher purchases from the glass
"Jewellery demand was incredibly strong in China last year
(up 16 percent to 1.9 million ounces) and will remain buoyant in
2013, although probably not quite matching the same level,"