Supplies of platinum and palladium, key ingredients in autocatalysts, are forecast to be in deficit for full-year 2016, with the dollar platinum price averaging $985/oz this year and $1,040/oz in 2017, Citi said Monday.
Strategist at the bank David Wilson said platinum is likely to register a 172,000 oz deficit with palladium short by 847,000 oz.
"We expect platinum to average $1,120/ounce in 2018. For palladium, we expect $570/oz (up 7% from previous estimates), $640/oz (up 2%), and $690/oz (unchanged) in 2016, 17, and 18 respectively," he said.
He added that overall the bank remains "fundamentally more bullish on palladium than platinum, medium to longer term."
This view is largely shared by the wider banking community.
The main reasons for a platinum deficit include South African supply growth remaining constrained near term and slowing growth in autocatalyst recycling combined with robust autocatalyst demand from Western Europe.
For palladium, autocatalyst growth in Asia will be key, in Citi's view, coupled with global demand for palladium in automobiles increasing nearly 3% to a record in 2016.
Platinum is the key ingredient in diesel engine catalysts, palladium in gasoline.
At 0730 GMT Monday, platinum was spot bid at $1,092/oz with palladium at $613/oz.
HSBC said Friday it remains bullish on the price outlook for platinum in the near- and mid-term, forecasting a $1,195 oz average for 2017. But it was less bullish for palladium, lowering previous predictions.
In a detailed report on the platinum metals group, HSBC senior analyst James Steel lowered the 2016 palladium forecast to $590/oz from $655/oz previously and cut the 2017 average to $690/oz from $790/oz.
The main likely drivers for the continued rally in the platinum price -- already up around 25% year to date -- are investment demand, and increased supply tightness, according to Steel.
Palladium is lagging, having rallied 7% so far this year.
In a bid to boost global platinum demand, industry lobby group the World Platinum Investment Council said Thursday it endorsed Japan's physical platinum exchange traded fund.
The move is part of a wider series of strategic initiatives WPIC is developing throughout 2016.
The underlying physical assets are held in trust by Mitsubishi UFJ Trust and Banking Corporation (MUTB) in Japan. MUTB is already the trustee and manager of the 'Fruit of Gold' series, as the ETF is commonly known in Japan.
Earlier in 2016, WPIC entered into a partnership with Valcambi, a Swiss precious metals refiner, aiming to increase platinum availability.
WPIC also partnered with Rand Merchant Bank to extend the Bullion Coin Custodian Certificate globally in December 2015, which aims to provide a safer, more cost effective means of buying platinum.
