On the results of 2016, Johnson Matthey (JM) expects for shortfall of 843 ounces (26,2 tons) of palladium in the global marlet within the next year which is almost in double more than in 2015 - 447 thousand ounces.
Palladium shortfall will be due to forecasted decrease in profit taking by investors in ETF funds - metal will be sold in fewer volumes. In contrast to platinum, almost entire palladium investment demand stands for ETF. Also, palladium is almost never used in the production of coins, therefore there is a great uncertainty regarding the investments in palladium. In the first quarter of 2016, investors to ETF from Europe, North America and South Africa, have sold about 110 thousand ounces of palladium. However, it was significantly lower than sales in October-December 2015, when investors sold approximately 500 thousand ounces of metal. JM forecast assumes that the repetition of significant sales is unlikely, but uncertainty in terms of global economic growth and size of palladium reserves will continue to have pressure on investors sentiment that will result in the negative total investment demand as well as it will amount to 295 thousand ounces against 659 thousand ounces last year. According to JM, the overall demand for the metal will grow by 5.7% to 9.862 million ounces (306.7 tons) including the demand in the automotive industry - up to 7.757 million ounces versus 7.629 million ounces in 2015.
PROPOSAL
Deliveries of primary palladium will slightly decrease - to 6.39 mln. ounces, 6.426 mln. ounces in 2015; at this, metal delivery from RSA will decrease by 6% - up to 2.521 million ounces, while Russia will supply to the world market 2.487 million ounces against 2.434 million ounces in 2015. Reduction of proposal from RSA will be due to the fact that manufacturers have no sufficient flexibility to supplement the supply from reserves. Slight decrease in the total volume of primary deliveries will be compensated by a slight increase in processing of recycled palladium derived from autocatalyst which may amount to 9% of the total proposal - to 2.11 million ounces. This figure suggests that the volume of scrap will show a moderate recovery from the very low levels of last year and in the first quarter of this year. Global deliveries of secondary metal are expected at the level of 2.629 million ounces, which is higher than in 2015 by 6.9%. Johnson Matthey is the world leader in the manufacture and deliveries of platinum and other platinum group metals (PGM). The company's main activities include the manufacture of autocatalysts, platinum process catalysts, complex chemicals, recycling, fabrication and marketing of PGM. Johnson Matthey's products are sold all over the world for many high-tech industries.
Source: RIA News ria.ru