Platinum, palladium prices and demand move in opposite directions in 2002, trend to continue in 2003
According to a report by Johnson Matthey (JM), platinum demand during 2002 rose by 5% to a new high of 6.54 million ounces, driven by strong sales in the China jewelry market and by increased usage in autocatalysts. Platinum supplies failed to keep pace, rising only by 2%, thereby widening the supply-demand deficit to 570,000 ounces. As a result, the price for platinum rose from US$481 per ounce at the beginning of 2002 to US$607 per ounce in December 2002 and then to a 23-year high of US$705 per ounce in March 2003. For 2003, JM expects a modest increase in supply will fail to close the gap with demand and platinum will trade between US$590 and US$690 per ounce for the rest of 2003.
Demand for palladium dropped 29% to 4.98 million ounces hitting a nine-year low. This drop was due to substantial use of inventory stock by some automakers. Even though supplies of palladium had a similar fall, down 28% to 5.25 million ounces, the market surplus remained and prices slumped from US$440 per ounce in January 2002 to US$230 per ounce in December 2002. For 2003 demand for palladium is expected to continue to lag as production should increase substantially due to expansion of platinum mining. JM expects palladium to trade between US$120 and US$180 per ounce in 2003.
Xstrata plant shutdown bodes well for price of vanadium
A report from Roskill Information Services suggests the vanadium market is showing signs of life following a turbulent period of oversupply and depressed prices. A decision by Xstrata to close its Windimurra plant in Australia combined with production problems in Russia have reduced the supply overhang resulting in pentoxide prices improving during the first quarter of 2003.
At the time of the bankable feasibility study for the Windimurra plant in 1997, vanadium pentoxide was projected to be US$3.50 per lb. When the plant came onstream five years later, it had fallen to US$1.40 and remained below US$1.50 for most of the following two and a half years.
This reflected not only a downturn in vanadium demand but also the burgeoning supply recovered from secondary sources. With the reduction in capacity, the market is regaining some lost ground and prices have recovered somewhat. Roskill expects the price to remain subdued in the medium-term, particularly if supplies increase in the absence of new markets and major new applications.