25 February 1998
According to the leading metals trader Standard Bank, Russian supplies of platinum, the noble metal used in automotive emission control catalysts, are nearly depleted.
"Sales from their legendary stockpile appear to be nearly exhausted", Standard Bank said in a statement summarising the findings of its Platinum Yearbook 1998.
Russia accounted for 700,000 ounces of the 4.77 million ounces supplied last year, according to estimates by leading refiner Johnson Matthey. South Africa supplied most of the rest, accounting for 3.66 million ounces, the refiner said.
Johnson Matthey's figure of 700,000 ounces for Russian supply, representing a drop of over 40% from its 1996 estimate, pointed to demand outstripping supply and prices rising.
But the world's top platinum miner, South Africa's Anglo American Platinum Corp (AMSJ.J), estimated Russian supplies at 800,000 to 900,000 ounces for 1997 while its nearest rival Impala Platinum Holdings Ltd (IPLA.J) spoke of over a million. Standard backed Impala's estimate but thought Amplats was best placed to profit from falling Russian supplies.
"Amplats (Anglo American Platinum Corp Ltd) is the only South African producer in a position to significantly take over the market share that is likely to arise from the demise in Russian sales", it said. Standard warned car manufacturers against over-reliance on platinum group metals such as platinum and palladium.
"Automobile manufacturers should consider very carefully when basing their ability to sell cars on the assurance of supplies which may well be subject to unexpected delays and which can only be contracted on a short-term basis," Standard said.
Trevor Pitts, Standard Bank Platinum Group Metals (PGMs) Marketing Manager, forecast platinum's trading range for 1998 at between $350 and $450 an ounce, a range matching the record figure seen last year after Russia starved the market of PGMs during the first six months.
Pitts said palladium, platinum's sister metal, used in catalysts, dental and electrical applications, would trade in a $180 to $280-an-ounce through the year, meaning fresh highs on the horizon for the metal. Palladium registered a morning fix in London of $248.50 an ounce on January 14, a level last seen in March 1980.
It is prices like that which could well do for palladium in the longer term, said Pitts, as end users become fed up with unreliable supplies. "I think the main concern is probably not price, it's reliability of supply. The car companies could absorb higher prices, it's not knowing what the Russians will deliver that's the problem", he said.
"Who knows whether palladium, which is nearly $250 an ounce now, won't in five years time be at $50", he said.