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Platinum market deficit set to shrink in 2017 - WPIC
November 22, 2016 / 6:00 AM / in a year

Platinum market deficit set to shrink in 2017 - WPIC

* Platinum market expected to see 100koz shortfall next year
    * Diesel share of European car market tipped to fall
    * Bar, coin investment seen weakening in 2017

    By Jan Harvey
    LONDON, Nov 22 (Reuters) - The platinum market deficit will
shrink to its narrowest since 2011 next year, the World Platinum
Investment Council said on Tuesday, as a drop in investment and
diesel's waning share of the European car market pressure
demand. 
    The WPIC also cut its expected platinum market shortfall for
this year to 170,000 ounces from the 520,000 ounces predicted in
September, citing a larger than expected drop in Chinese
platinum jewellery demand, and higher recycling. 
    That deficit will likely shrink to 100,000 ounces in 2017,
it said, cutting above-ground stocks of the metal to 2.045
million ounces by the end of next year, the WPIC said.
    "It's all good and well to say that metal is available from
above-ground stocks, but as soon as the vaulted holdings aren't
for sale, any deficit makes for concern, especially from
industrial users," the WPIC's director of research Trevor
Raymond said.
    Autocatalyst demand is expected to decline 1 percent next
year, the WPIC said, as diesel's overall share of the
autocatalyst market shrinks.
    Demand for platinum for use in catalytic converters was flat
this year, it said, in the face of concerns that last year's
Volkswagen emissions scandal would dent demand for diesel cars,
which use a higher loading of platinum in their autocatalysts.
    "At the moment, the 2016 percentage of diesels on European
roads is 50 percent. Our forecast for next year includes a 48.5
percent diesel share, so that's a fairly aggressive fall,"
Raymond said. There has also been a move to other forms of
emissions control technology, he said.
    Investment in platinum, which is expected to have risen 15
percent this year on the back of strong coin and bar demand,
particularly in Japan, is forecast to fall by more than a
quarter next year, the WPIC said.
    It expects bar and coin investment to lighten, and demand
for platinum-backed exchange-traded funds, which tailed off
recently after a strong start to the year, to be little changed.
    Overall platinum demand is tipped to fall 3 percent this
year to 8.04 million ounces, the WPIC said. Jewellery demand is
expected to slip by 10 percent, or 300,000 ounces, as buying in
number one consumer China drops for a second year.
    On the supply side of the market, refined production by
mining companies is predicted to have fallen 3 percent this
year. The WPIC revised up its forecast for recycled platinum
supply this year to 1.86 million ounces from 1.745 million in
September, due chiefly to rising jewellery recycling in China. 
    
    PLATINUM SUPPLY/DEMAND ('000 OZ)*
                                2015   2016   2017
                                        (f)    (f)
 Refined production             6,150  5,970  6,070
 Change in producer inventory      45     40    -70
 Total mine output              6,195  6,010  6,000
 Recycling                      1,710  1,860  1,745
 TOTAL SUPPLY                   7,905  7,870  7,745
                                                   
 Automotive demand              3,395  3,390  3,360
 Jewellery                      2,880  2,580  2,625
 Industrial                     1,685  1,720  1,610
 Investment                       305    350    250
 TOTAL DEMAND                   8,265  8,040  7,845
                                                   
 Balance                         -360   -170   -100
 Above-ground stocks            2,315  2,145  2,045
 * Source: World Platinum Investment Council, Platinum Quarterly
Q3 2016

 (Reporting by Jan Harvey. Editing by Jane Merriman)

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