The price of platinum is forecast to average $1,457/oz in 2014, 2% down from the 2013 average of $1,487/oz, as strike action has failed to give the metal any meaningful lift so far, metals consultancy GFMS said Friday in a report.
"The sustained strike action in the South African platinum mining industry has not fed through to noticeably higher prices thus far this year, but is expected to lead to increases in the second half-year -- even if the strike comes to an end soon," Thomson Reuters/GFMS said in the Platinum & Palladium Survey 2014.
Platinum production losses owing to South African strike action are estimated at more than 0.60 million oz, with a further 0.30 million forecast even after the strikes stop "as a result of absenteeism, underground 'safe-start' preparation, re-training and ramp-ups."
Platts reported in late April that South Africa's biggest platinum producer, Angloplats, began meeting with thousands of its workers to try to sell the new pay deal to them directly amid acrimony from their union, AMCU.
However, the South African platinum talks collapsed recently all but killing the chance of collective bargaining ending this damaging and expensive strike of more than 13 weeks.
The talks were trying to end the strike by more than 70,000 workers at Lonmin, Angloplats and Implats in the Rustenburg platinum belt, 120 km northwest of Johannesburg. The action has cost the mines, which produce around 40% of world supply, nearly $1.5 billion in production and the workers $600 million in wages, according to calculations by Lonmin.
Looking at GFMS' data, the report said that its "projected total platinum losses are equivalent to seven weeks-worth of 2013 world demand, and will help to send platinum back into a deficit this year after a surplus in 2013."
The report said the platinum market was in surplus in 2013 -- prior to inventory movements -- of 0.49 million oz, "although the market is expected to revert to a deficit in 2014, driven by the disruption in the South African platinum mining sector, which typically accounts for more than 70% of world mined platinum supply."
In 2013, supply from platinum autocatalyst scrap rose by 9% to 0.99 million oz, "reflecting healthy increases across all regions, following a year of notable declines in 2012, and thus reinstating the post-recession recovery path."
Autocatalyst demand fell by 1.2% to 2.91 million oz (90.6 mt) in 2013.
"Demand increases from China and to a lesser extent North America proved unable completely to offset the continued negative trend in Europe, the largest market for platinum autocatalyst demand," the report read.
Thomson Reuters/GFMS expects the knock-on effects of the South African strike to filter through into the platinum price as the year develops and is looking for a test of $1,700 before the end of the year.
Platinum fixed Thursday afternoon at $1,412/oz. The metal fixed in the afternoon of January 2 at $1,388/oz.
