Platinum supply worldwide is expected to remain in surplus this year, in what will be the precious metal's eighth consecutive year in surplus, Thomson Reuters GFMS said Thursday.
The outlook, contained in Thomson Reuters GFMS's Platinum & Palladium Survey, also states that platinum's gross surplus eased by some 12 percent last year to 735,000 ounces, although this remained substantial by historical standards.
The narrowing of platinum's gross surplus owed much to a near 7 percent rise in fabrication demand to a three-year high, GFMS said in a statement.
The survey revealed that the gains were quite broadly based, led by a marked recovery in Chinese jewelery offtake, as prices declined sharply in the latter part of 2011. Similarly, retail investment also recorded sizeable gains towards the end of the year, led by resurgent sales in Japan as platinum traded below gold.
Finally, the consultancy noted the 4 percent lift for platinum autocatalyst demand, although this was restrained by the effects of continuing substitution in favor of palladium, lackluster vehicle production in Europe and last year's natural disasters in Japan.
As a result, platinum autocatalyst demand remained considerably short of pre-recession levels, Thomson Reuters said.
Overall, the increase in global fabrication demand outweighed a near 5 percent rise in global platinum supply last year, enabling the above 12 percent year-on-year decline in platinum's gross surplus, Thomson Reuters said in the report.
Last year's supply growth was driven by a recovery in Canadian mine production, as Vale's operations returned to normal and mining ramped up at Lac des Iles.
Meanwhile, platinum supply from autocatalyst recycling grew by close to 9 percent last year; a performance which might have been stronger were it not for a fourth quarter decline in the face of weaker prices for all platinum group metals.
Jewelry scrap rose by 11 percent due to a jump in Japanese recycling which benefited from further development of the country's collection infrastructure.
The fact that platinum prices remained elevated over much of last year -- enabling a new all-time high in annual average terms of $1,722 -- was testament to broadly favorable investor sentiment, evidenced by a 12 percent rise in world investment demand, the group said.
Thomson Reuters GFMS said it expected a rise in gold investment during the second half of 2012 that will spill over into the platinum market, with prices also likely to find solid support from production cost pressures in the South African mining industry.
However, the ongoing Eurozone crisis presents a major downside risk, given the concentration of platinum autocatalyst demand in Europe. Thomson Reuters GFMS therefore expects platinum to trade in a range of $1,475 to $1,775 over the remainder of this year.
The most actively traded platinum contract on the Comex was down $13.30 to $1,551 in Thursday morning trading.