Platinum and palladium prices expected to struggle this year

PLATINUM and palladium prices are expected to struggle this year, with analysts drastically scaling back expectations for both metals as the euro zone debt crisis threatens global economic growth, a Reuters poll shows.

However, the gradual resolution of the European crisis, together with a resurgence in global growth and constraints to supply, are likely to boost prices again next year.

The Reuters survey shows the median forecast for platinum at an average $1610/oz this year, down from the median $1900/oz forecast in July and below the median trading price of $1765 last year.

The survey of 29 analysts includes views ranging from $1829 to a low of $1360. For next year, analysts expect an average platinum price of $1812,50/oz.

Platinum’s heavy dependence on the broader European economy and demand for catalytic converters means consumption is likely to be constrained this year by the debt crisis, although this could be partially offset by robust Chinese demand for jewellery, another key source of offtake.

Mine supply is expected to grow this year but the potential for disruptions in top producer SA due to electricity shortages remains.

“End-user demand will be needed to help investors drive any price rises, and a weak outlook for European automotive output (and hence platinum use) is worrying,” says David Jollie, an analyst at Mitsui Precious Metals.

“We expect the global economic outlook to improve, aiding industrial platinum demand, and jewellery demand seems to be robust in China, suggesting that some move towards higher prices is likely later in the year,” Mr Jollie says.

“However, with relatively weak fundamentals, it seems unlikely that platinum will trade at an average price in excess of last year’s level,” he adds, forecasting an average price of $1575 this year.

The platinum price, which fell by 22% last year, has risen by 15% so far this month to above $1600/oz, set for its largest monthly gain since February 2008.

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Tags: platinum, platinum futures, platinum futures prices, platinum price, platinum price 2012, platinum prices

Posted by admin on Jan 27 2012. Filed under Palladium, Platinum. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry