Platinum is set for an annual deficit of 20.3 mt in 2015 and palladium a 13.3 mt deficit, Johnson Matthey said in its semi-annual review on platinum group metals Thursday.
In platinum, overall demand is expected to increase by 3.1 mt, to reach 258.2 mt for 2015, driven largely by higher than expected investment demand, as well as steady automotive demand and "modest" gains in the most industrial applications.
In a reverse of expectations earlier this year, net investment should rise to 11.4 mt, largely on the back of strong sales of platinum bars in Japan, which benefited from a fall in the yen platinum price below Yen 4,000/gram in July.
And at 133.8 mt, South African mined supply will be the highest since 2011, but low prices will cause a 13% drop in recycling volumes, the company said.
Johnson Matthey describes the influence of platinum exchange-traded funds as "neutral", despite Commerzbank putting total ETF outflows at 9.2 mt for 2015 in a note Thursday.
In palladium, overall demand is expected to drop 12% to 292.1 mt, as ETF investment falls by 41.4 mt.
Auto consumption will set a new record of 233.3 mt, but the rate of growth is expected to fall as the Chinese market slows.
Palladium supplies are expected to rise by 6% to 200.6 mt as South African mine output recovers from strikes this year, whilst scrap again is down.
As with platinum, weak steel and PGM prices have meant there is little incentive to scrap cars, and autocatalyst recovery in platinum is expected to fall by 10% this year.
Commerzbank warned in a note Thursday both platinum and palladium deficits predicted by Johnson Matthey "could turn out to be lower if rising prices were to cause investment demand to cool."
Johnson Matthey is the world's largest refiner of platinum and palladium.
