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Angloplat sees plat price of $1 500/oz in 2010
February 8, 2010
Anglo Platinum (Angloplat), the world's largest platinum producer, on Monday said it expected the platinum price to remain at above $1 500 (R11 625) per ounce on average in 2010.
This is as the market begins to benefit from small improvements in the global economic recovery and re-stocking further increases the expected demand recovery in 2010.
Palladium prices are also seen as strengthening on firm investment demand and the strong reliance on it of gasoline engines, more typical in smaller engines and in the growing Chinese market.
"Rhodium remains in demand for its particular catalytic properties but suffered demand loss due to thrifting at the very high prices during 2008," Angloplat said.
Angloplat on Monday blamed reduced metal prices for the 95 percent fall in its full year headline earnings to R710 million, or 298 cents, for the 12 months to end December 2009 from R13.29 billion, or 5 609 cents a share, in the 12 months to end December 2008.
The average prices achieved on platinum, palladium, rhodium and nickel sales for the year were $1 199 per ounce, $257 per ounce, $1 509 per ounce and $14 424 per ton respectively.
"The unprecedented volatility in platinum demand and price experienced in 2008 was followed by a period of consolidation in 2009."
"The inherent strength in the structure of the platinum business saw the platinum market return to balance during 2009, as jewellery and investment demand increased, reacting to lower price levels in the first half of the year and as investor sentiment improved," Angloplat said in its results commentary.
These increases offset depressed demand for metal for use in autocatalysts and lower demand from the industrial sector.
Demand for platinum group metals (PGMs) in the autocatalyst industry declined in 2009 due to falling automobile production relative to 2008.
The reduction in metal purchased by auto manufacturers was exacerbated, in the first half of the year, by their need to decrease vehicle inventory levels hence restricting production and selling from available stock.
Some re-building of these inventories together with widespread government incentive schemes saw a firming in PGM demand in the second half of 2009.
Incentive schemes resulted in an increase in the sale of smaller gasoline vehicles and a consequent reduction in diesel vehicle demand in Europe.
Vehicle sales in 2010 are expected to be similar to those in 2009 but production levels in 2010 will be higher as fewer sales from inventory are expected in 2010 and production levels recover to match sales.
Higher sales of larger sedan vehicles are expected as diesel fleet purchases re-commence.
In the industrial sector, demand for platinum in 2009 reduced in line with the global economic decline.
Low utilisation rates in the chemical and petroleum sectors further reduced demand for new metal as companies reduced inventory levels and glass demand was negatively affected by excess capacity and a return of metal from decommissioned plants.
While demand for industrial products is expected to recover slowly, platinum demand will be enhanced by a substantial element of re-stocking.
Demand for platinum jewellery fabrication, on the other hand, responded quickly and strongly to the lower platinum prices in the latter part of 2008 and the first half of 2009 with increased demand most notable in the unsaturated Chinese market.
Total demand for jewellery in 2009 was 70 percent higher than in 2008 but jewellery demand is expected to be lower in 2010 as inventory levels in the supply chain are adequate following the extra demand that re-built them in 2009.
While the higher price is seen as discouraging new jewellery demand in mature markets, the Chinese jewellery market continues to react positively to show sustained price increases and remains the largest jewellery market.
The big story in 2009 was investor inflow into the platinum and palladium Exchange Traded Funds (ETFs), which continued strongly throughout the year.
Platinum holdings increased by just over 380 000 ounces and palladium by just over 506 000 ounces in 2009 and the expected launch of the US based ETFs supported firm investment demand towards the end of 2009.
Another good year is expected from the investment segment in 2010, particularly as the US ETF has been launched.
Looking ahead, Angloplat said it expects the platinum market in 2010 to return to a position of deficit as a result of a moderate increase in supply but a significant recovery in demand.
"South African production is expected to remain constrained as producers adapt to a safer working environment and as lower rand metal prices result in production being restricted at high cost operations across the industry," the company said. - I-Net Bridge
To read Anglo Platinum's 2009 results statement - click here to download full document
To view Anglo Platinum's 2009 results presentation - click here to download full document
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