Johnson Matthey, the world's largest platinum and palladium refiner, said Tuesday that it now expects the global platinum market to record a 13 mt deficit for 2016, against its previous estimate of a 26.8 mt deficit.
The platinum industry can also expect its first surplus in seven years in 2017, the company said in its latest market report, due to a predicted fall in auto and jewelry demand.
Total platinum supply for 2016 is expected to decrease by 1.6% on the year to 187 mt, up from its previous estimate of 183 mt. While gross total demand is expected to remain relatively flat on the year at 259 mt, compared with its previous estimate of 270 mt.
The revised forecast is due to a significant fall in jewelery demand, expected to fall 9% from a year earlier to 80 mt in 2016.
Adding to a more balanced market, recycling is expected to increase 10% on the year, to 59 mt in 2016.
Johnson Matthey also lowered its 2016 palladium forecast to a 20 mt deficit, from 26 mt previously. This compares with an 11 mt deficit in 2015.
The palladium market is expected to show a 4.6% increase in demand to 301 mt in 2016, while supply is expected to remain flat at 202 mt.
The extra demand is expected to come largely from autocatalysts, up 2.5% to 244 mt. A new record high, demand is expected to continue to benefit from Chinese car sales, boosted by tax incentives, JM said.
Liquidations of investment positions in palladium are also set to continue, at 11 mt in 2016, while recycling is expected 4% higher on the year at 79 mt.
Johnson Matthey have forecast the deficit in the palladium industry to increase in 2017 "even if there is a rebound in recycling volumes and ETF holders continue to liquidate their investments."
"Mine shipments of palladium are predicted to remain flat in 2017, while gross demand in consuming applications -- autocatalyst, industrial and jewellery -- is set to continue its upward march," the company said.
Platinum is priced around $928/oz Tuesday 1630 GMT, palladium at $702/oz.
