World demand for platinum rises

The use of platinum in autocatalysts increased about 15% in 1986, representing 37% of western world demand for the metal, Johnson Matthey reports in its research publication Platinum 1987.

More than one million ounces of the metal went into the global manufacture of emission control systems (catalytic converters) for motor vehicles last year, with growth in demand particularly marked in western Europe.

In all, world demand for platinum rose by 30,000 oz last year compared with 1985 to a record 2.89 million oz. (The previous record demand came in 1979, with 2.88 million oz absorbed.)

South Africa, despite the early- year strike at its second largest producer, Impala, boosted exports to a record 2.35 million oz, or 83% of the total supply to western markets. Total supply to the West was 2.83 million oz.

The Soviet Union’s supply to the West accounted for 290,000 oz, up 60,000 oz from 1985 but well below the 640,000 oz shipped in 1977.

Johnson Matthey estimates that western world demand in 1986 exceeded supply of newly-mined metal by some 60,000 oz.

Second largest consumer of platinum in 1986 was the jewelry industry, which accounted for 30% of world demand. Japanese jewelry manufacturers bought more of the metal than in any year since 1978; their purchases represented 25% of total 1986 demand.

The most explosive growth in demand for platinum last year, says the company, came from investors in small bars and coins of not more than 10 oz. Net purchases from this sector were responsible for 16% of western demand, compared with 9% in 1985 and 2% in 1982.

In the United States, investor demand surged from 1985’s 130,000 oz to 300,000 oz last year, representing two-thirds of world investment demand and 25% of total U.S. demand for platinum.

Investment in small bars and coins is now the third largest source of demand (16%) for platinum, and it appears to have become a sustainable market, the company reports. Last year, 75% of net investment was for small ba rs and medallions, with sales of the Noble coin making up the balance.

Other sources of demand for platinum include the chemical industry (7% of the 1986 total demand), the electrical industry (6%) and glass manufacturers (3%).

Platinum sold for an average price of $467(US) last year. Spot prices for the metal, which have topped $600 this year, were recently in the $580 range.