Tuesday, November 26, 2013

"Platinum deficit to widen while prices decouple from gold"

More on HSBC's platinum call.
Pt $1,378.7, Au $1,245.00
From Mineweb:

According to HSBC, the metal’s long term outlook is bullish, but it has been more influenced by gold prices this year than expected.  
The deficit between platinum supply and demand should widen to nearly 889,000oz this year before narrowing to around 402,000oz in 2014, HSBC says.

But, this doesn’t mean necessarily that platinum prices will head higher. According to the bank, while it expects the tight supply picture to drive prices in the future, it has cut its average price forecasts for this year and next to $1,500/oz  and $1,625/oz respectively from 1,580/oz and 1,725/oz.

Part of the reason for this, the bank writes in its latest Platinum Group Metals Outlook publication, is that the metal has been more influenced than it expected by the recent falls seen in gold, which it says will likely pull average platinum prices lower than might otherwise have been the case.

But, the bank writes, tighter fundamentals in the platinum market over the course of the next year are expected to see the metal shake off the yellow metal’s influence and increasingly decouple from gold.
Adding that a rotational shift out of commodities and into equities has also taken a toll on platinum prices this year, the bank argues that another reason for the lack of decisive upwards movement (despite a significant deficit seen so far this year) is that the availability of above-ground stocks, may be larger than is generally believed.

But, it writes, “While above-ground stocks may be currently ample to finance the production/consumption shortfall in the platinum market, we believe that persistent deficits going forward will eventually drive prices higher. Currently low lease rates imply there is no immediate shortage of platinum.”

On the demand side, the bank does not expect the recently launched South African platinum ETF to enjoy quite the same level of success in 2014 as it has enjoyed this year (HSBC raised its forecast for ETF increases in 2013 to 750,000oz) but it does expect ETF demand to continue to grow. It expects ETF demand to rise by 150,000oz in 2014.

Demand for autocatalysts is also expected to grow in stature in 2014, as “moderating but still strong demand in the US and China” complements a mild recovery in demand from Europe....MORE
If You Absolutely Have to Have Precious Metals Exposure, Consider Platinum (HSBC)