| |
Despite the depressed global economy, the sovereign debt
crisis in Europe and natural disasters in 2011, platinum
demand remained remarkably resilient, with gross demand
for platinum up 2% at 8.2 million ounces in 2011. Record demand
from the industrial sector, coupled with muted growth in the jewellery
and autocatalyst sectors, made up for a decline in investment demand.
A small increase in recycled platinum and increase in mined supply of
5% took total supply to 8.3 million ounces, resulting in the platinum
market in 2011 remaining in balance.
Gross demand for palladium declined in 2011, despite increases
in autocatalyst and other industrial demand. Purchases of palladium
for jewellery declined while investment demand was net negative
in 2011. Total demand fell by 19%, to 8.3 million ounces. With an
increase in both mined and recycled metal, the palladium market
moved into a surplus of 925,000 ounces.
Gross demand for rhodium rose by 20,000 ounces to
925,000 ounces in 2011, notwithstanding a decline in demand
from the autocatalyst sector. It was boosted by strong consumer
demand for televisions and computer displays, which resulted in the
construction of new glass manufacturing capacity. With supplies of
rhodium increasing from both primary and secondary refining, the
market remained in surplus for the fourth consecutive year. |
| |
Platinum supply and demand |
| (000 oz) |
2011 |
2010 |
| Supply |
|
|
| South Africa |
4,760 |
4,640 |
| Russia |
825 |
825 |
| North America |
360 |
200 |
| Other |
435 |
390 |
| Total supply |
6,380 |
6,055 |
|
|
|
| Demand |
|
|
|
3,350 |
3,200 |
|
(1,240) |
(1,100) |
| Jewellery |
1,800 |
1,680 |
| Industrial* |
1,925 |
1,770 |
| Investment |
425 |
620 |
| Total demand |
6,260 |
6,170 |
| Movement in stocks |
120 |
(115) |
|
|
| |
AUTOCATALYST |
In 2011, this segment was greatly affected by extraneous factors
initiated by two natural disasters: the earthquake and tsunami in
Japan, and the floods in Thailand. Despite these events and the
significant general restraints on global economic growth, demand
for light-duty vehicles rose by 1% in 2011, to 75 million units.
Weakness in some markets was more than compensated for by
demand growth in China and North America.
Gross demand for platinum increased by 5% to 3.35 million ounces;
and demand for palladium increased by 9% to 6.12 million ounces.
Purchases of rhodium were slightly lower year on year, at
705,000 ounces. |
| |
North America |
| Sales of light vehicles in the US rose by 10% in 2011 to 12 million
units. Sales were boosted by the increase in the average fleet age,
which necessitated the replacement of ageing vehicles. Production,
although up on 2010, was constrained by supply-chain disruptions
following the earthquake and tsunami in Japan. Inventory levels are
now standing at 60 days (the historical norm). Lower gasoline prices
saw light-truck popularity return and accounted for 49.2% of
light-duty production – up from 47.5% the year before. Together with
a strong increase in the output of medium- and heavy-duty trucks,
this underpinned a 14% increase in platinum demand in 2011, to
470,000 ounces. With an increase in the supply of platinum from
recycling, net demand for new metal was negative for the second
consecutive year. The decreasing average engine displacement to
meet more stringent fuel-economy standards partially offset the
higher production of gasoline-powered light-duty vehicles, and
palladium demand rose by 5% to 1.43 million ounces in 2011. |
| |
Japan |
| Sales of vehicles in Japan grew strongly in the last quarter of 2011 as
the industry recovered from the disasters in March. The increase in
the last quarter was insufficient to make up for weakness in the
beginning of the year and at 4 million units total sales are 20% lower
than in 2010, their lowest level in over four decades. The March
2011 disasters in Japan and the recent flooding in Thailand
disrupted production and hence the availability of stock. At 8 million
units, the overall output from Japanese automakers was 10% lower
than in 2010. Gross demand for platinum and palladium fell by 14%
and 18% to 476,000 ounces and 673,000 ounces respectively,
reflecting the reduction in vehicle production. Japanese production
is expected to increase in the first quarter of 2012, to compensate for lost volume. It is recovering faster than anticipated thanks to an
impressive effort by automakers and component suppliers. |
| |
Europe |
| Registrations of new light vehicles in Europe (EU27+EFTA)
declined, with Germany the only major economy registering growth
in 2011. The production of vehicles increased by nearly 3%, buoyed
by Germany and export markets. The German market has shown
remarkable resilience, supported by both domestic and export
demand. The fitment of diesel particulate filters increased to meet
Euro-5 emissions legislation enacted in 2011. Demand for platinum,
however, decreased slightly to 1.48 million ounces because of the
increasing replacement of platinum by palladium in diesel oxidation
catalysts. Demand for palladium increased by 12% to 1.488 million
ounces as a consequence. The production of heavy-duty diesel
vehicles increased strongly in 2011, giving support to demand for
both platinum and palladium. |
| |
China |
| Sales of light-duty vehicles in China rose by 2.3% to 17.2 million
vehicles in 2011. Production rose to 17 million, a 2.3% increase on
2010. Although still rising, the rate of increase in sales has slowed on
the back of higher fuel prices and policies implemented to stem
vehicle demand. China is predominantly a gasoline market that tends
to favour palladium/rhodium three-way catalysts, and Chinese
demand for palladium rose to over 1 million ounces in 2011. Demand
for platinum was boosted by an increase in production of heavy-duty
diesel vehicles and grew to 120,000 ounces in 2011. Euro-4-equivalent legislation has been in place in China since 2010. However,
the advantages gained by technological advances in emission control
and by smaller average engine displacements have translated into
lower-than-average PGM loadings on vehicles per legislative category
in China, compared with those in more advanced regions. |
| |
Rest of World |
| Growth in vehicle production in India, South America and Russia
underpinned a 19% increase in gross platinum demand and a 9.6%
increase in palladium demand, to 608,000 ounces and 1.18 million
ounces respectively. Like China, India follows the European Emission
Standards (called “Bharat” in India). Since 2005, the Euro-3 standard
has been applied in 11 major cities while Euro-2 is applied in the rest
of the country. Some local original equipment manufacturers (OEMs)
have been producing Euro-4-compliant engines. India favours diesel
vehicles and diesels represented 38% of light-duty production in
2011, underpinning strong demand for platinum. |
| |
JEWELLERY |
The troubled global economy significantly influenced platinum- and
gold-price volatility, and thus affected consumer- and jewellery-trade
behaviour in 2011. The combination of lower platinum prices
and constrained economic growth brought benefits and challenges
to the global jewellery market.
The jewellery markets in China and India have been positively
influenced by domestic demand for gold – mainly for investment, but
often in the form of 24-carat jewellery. Driven by a mix of investment
potential and “safe haven” status, the demand for gold provided a
windfall in sales and profit for these markets. Coupled with a number
of initial public offerings (IPOs), this has enabled retailers to invest
further and thus rapidly expand their retail footprint. The increased
stockholding and greater penetration directly benefited the demand
for platinum jewellery.
Since September platinum has been priced below gold and has
changed the jewellery dynamic – largely for the better – as retailers
note and review the dollar profit opportunity in restocking with platinum
instead of white gold. The core potential beneficiaries of this situation
are the retailers and manufacturers in China, Japan and India, and those
serving the female bridal market in the USA. The effect has been
particularly visible in platinum sales on the Shanghai Gold Exchange
(SGE); these were up by 16% in 2011.
The demand for platinum jewellery in China and India has continued to
increase in ounces, driven partially by higher gold and lower platinum
prices, but also by the continuing promotional activity of Platinum
Guild International. In China, rising labour costs and competition for
skilled labour has reduced trade margins. The platinum bridal market
is likely (as in recent years) to remain better protected than the
jewellery sector against downturns in the economic climate. At the
consumer level, the non-bridal jewellery market exhibits a contrast
between younger Chinese and Indian consumers who buy jewellery
mostly for themselves or as gifts, and the much older Japanese female
consumers who are the core drivers of the non-bridal platinum
jewellery market in Japan.
Global net demand for platinum for the manufacture of jewellery has
been estimated at 1.8 million ounces in 2011, up by 7% on 2010.
The increase was the result of stronger demand from China and the
Rest of World region, coupled with a decrease in the recycling of old
jewellery. |
| |
China |
| Gross demand for platinum for jewellery fabrication in China rose by
2% in 2011, but a decrease in the recycling of old jewellery resulted in
net demand increasing by 16%, to 1.4 million ounces. Platinum’s
higher prices did not deter buying on the SGE in 2011, with volumes
traded totalling 932,000 ounces. In contrast demand for palladium for
jewellery manufacturing declined dramatically in 2010 owing to a lack
of promotional support at the retail level, sustained higher prices and a
sharp increase in the recycling of old jewellery and unsold stock. |
| |
Europe |
| Gross demand for platinum for jewellery fabrication in Europe
declined by 5% in 2011 on account of a decline in the number of
watches produced in Switzerland and a fall in the number of items
manufactured in the UK. The latter was exacerbated by a decline in
the average weight of the items. Nevertheless, in percentage terms,
the decline in the number of platinum pieces hallmarked was smaller
than the decline in gold pieces. Higher gold prices encouraged
buyers to buy platinum rather than white gold. Palladium jewellery is
gaining market share in the UK, particularly in the male-wedding-ring
market, but higher prices have encouraged the production of
smaller, lighter pieces. |
| |
North America |
| At an estimated 173,000 ounces in 2011, demand for platinum for
jewellery fabrication was largely unchanged from 2010. Strong
brands reported good sales both domestically and in export markets.
Platinum’s discount to gold has helped it gain market share in the
engagement and bridal markets. The Palladium Alliance
International launched a consumer campaign for palladium
jewellery, which may help to boost demand. |
| |
Japan |
| Platinum consumption for the fabrication of jewellery increased to
319,000 ounces in 2011. However, net demand was negative in
2011 as the result of an increase in recycling. Consumer demand was
initially negatively impacted by the earthquake and tsunami in March,
but rebounded strongly thereafter. The number of weddings
increased in the months following the disaster, with a concomitant
increase in the sales of engagement and wedding rings. Palladium
jewellery has not had much success in Japan. Palladium is
nevertheless used in platinum and gold alloys, and demand in these
areas remained relatively static. |
| |
Rest of World |
Strong growth in platinum jewellery fabrication in India, Thailand and
Vietnam (the latter two for export) resulted in a 25% increase in
purchases of platinum in the Rest of World region. Platinum jewellery
sales in India in the first half of the year were boosted by the first
wedding season and the Akshaya Trithiya festival. Platinum is offered
by all the leading brands in India and is now available in 60 top cities.
Palladium jewellery has a small presence in Russia. However, most
of the amount of 30,000 ounces consumed in the Rest of World
region is used in alloying with other metals. |
| |
INVESTMENT |
In September 2011, platinum and gold suffered the consequences
of the significant move away from commodity holdings by
investment and hedge funds. Although there was little change in
physical demand for platinum, the increased platinum trading
liquidity greatly exaggerated the consequent fall in the platinum
price. Since then reduced investor participation, particularly by gold
investors who previously held both metals, has kept the platinum
price at depressed levels – below the incentive price of production.
Demand for platinum investment products declined by 49% in 2011
with higher demand for platinum bars in Japan in the second half of
the year unable to make up for softer demand for ETF products. |
| |
Exchange-traded funds (ETFs) |
| ETFs are designed to enable investment in specific commodities
without the investor having to take physical delivery of the product.
These funds are backed by physical metal and as such are considered
investment demand. In April 2007, ETF Securities launched five ETFs
in platinum, palladium, gold, silver and a basket of the aforementioned
on the London Stock Exchange. In May 2007, the Zurich Cantonal
Bank (ZKB) launched three white precious metal contracts. Since
then other PGM ETFs have been launched. At the end of 2011, total
platinum holdings were nearly 1.5 million ounces, an increase of
190,000 ounces over the year, while palladium at 1.7 million ounces
shed over 500,000 ounces over the same period. |
| |
Physical investment products |
| Physical investment products consist of coins, medallions and
small bars. Platinum’s lower price coupled with its discount to gold
underpinned strong demand for investment products in Japan,
which rose to an estimated 270,000 ounces in 2011. |
| |
HYDROGEN FUEL CELLS
When used in distributed-generation applications, fuel-cell systems
produce reliable power when and where it is needed. Numerous
companies are recognising these benefits, for example:
| • |
In 2012, a Ballard 1-megawatt fuel-cell system will start enabling Toyota
Motor Sales USA to satisfy peak-power needs at its headquarters in
California. While creating significant savings, it will also offset over
10,000 tonnes of CO2 emissions annually. The system’s hydrogen is to
be produced by steam reformation of renewable biogas generated at a
landfill, and delivered to the site via a pipeline. Moreover, by using the
fuel cells’ waste heat in place of natural gas to generate hot water and
heating, the system will save another 28 tonnes of CO2 emissions. |
| • |
GS Platech, a subsidiary of one of South Korea’s largest petroleum
refiners, has demonstrated waste-to-energy power generation that uses
zero-emission fuel cells and hydrogen produced by processing
municipal solid waste. The system addresses two key environmental
issues in tandem: environmentally responsible waste treatment; and
clean power production. |
| • |
At K2 Pure Solutions’ bleach plant in California, a fuel-cell system will
convert hydrogen, produced as a by-product of the chemical-production
process, into clean load-following electricity. This
zero-emission power, which will be used on-site, will offset demand
from the grid, lower overall energy costs and reduce the company’s
environmental footprint. |
There is definite evidence of real market traction in the fuel-cell industry
across a diverse range of companies and applications. It is clear that,
increasingly, the technology is being validated as both reliable and
commercially meaningful.
Key developments in the hydrogen-fuel-cell industry
in 2011
Hydrogen fuel cells using platinum catalysts are an efficient, reliable and
scaleable source of clean electricity. There are significant commercial
opportunities today, in multiple markets. Momentum is building, with
product deployment by high-profile companies demonstrating the
economic and environmental benefits offered by fuel-cell solutions.
Recently, ClearEdge Power signed a US$500 million agreement to supply
50 megawatts of stationary fuel-cell systems to an Austrian renewable-energy
company. A deal of this magnitude represents a significant milestone and an indication of future growth in the fuel-cell industry.
Warehouse and high-throughput distribution-centre operators such
as Procter & Gamble, BMW and Sysco are deploying fuel-cell-powered
forklift fleets to reap the many benefits afforded by the
technology, including increased fleet productivity, decreased
facility-operating costs and reduced greenhouse-gas emissions.
Plug Power’s GenDrive® fuel cells provide material-handling
facilities with a constant and reliable power source, ensuring that
forklift trucks run at full speed for the entire work period. Plug
Power has deployed more than 1,500 GenDrive® units in the field
where, on average, customers are realising a 15% increase in
productivity and a 30% decrease in operation costs. The entire
forklift fleet at Walmart’s refrigeration distribution centre near
Calgary, Alberta, is powered by fuel cells, achieving an estimated
saving of over US$150,000 in operating costs annually.
Buses powered by zero-emission fuel cells are helping transit agencies
to meet the demand for reliable and green public transportation. The
functionality of fuel cells in bus applications is well proven, with
companies such as UTC Power and Ballard Power Systems providing
fuel cells for transit fleets throughout the world. In recent months, major
purchases and a number of milestones have validated the technology’s
commercial status. In Canada, a 20-bus fleet operated by BC Transit and
powered by Ballard’s fuel-cell modules recently surpassed 1.67 million
kilometres of revenue service. The hydrogen-fuelled fleet, the largest in
the world, has operated a total of 80,000 hours, and completed more
than 9,600 safe refuellings. Ballard also recently signed a letter of intent
to supply 25 of its FCvelocity™ fuel-cell power modules for buses in Sao
Paulo, Brazil; and signed an agreement to power 21 buses in various
European cities – volumes that signify growing interest in clean fuel-cell
bus solutions.
Fuel-cell systems are also providing benefits in stationary applications.
Wireless network operators worldwide are increasingly implementing
fuel-cell backup power solutions to lower their environmental impact,
improve network reliability and reduce operating expenses. More than
150 IdaTech backup-power fuel-cell systems have been installed in
Hutchison Indonesia’s network, instead of traditional diesel generators.
Dantherm Power, has supplied over 120 fuel-cell systems for redundancy
in Denmark’s critical safety communication network.
Recently, during the 17th Conference of the Parties to the United Nations
Framework,
Convention on Climate Change (COP17) in Durban in South
Africa, Anglo American Platinum Limited deployed a 150-kilowatt
Dantherm Power fuel-cell system to demonstrate clean-energy
production and supply power to the local electricity grid.
Because market opportunities have been growing steadily, more
substantial fuel-cell products are now generating volumes that stimulate
economies of scale in manufacturing, drive down product cost and
increase infrastructural development. This is opening the door to a wider
range of short-term opportunities with extremely large growth potential,
such as combined heat and power applications for the residential market
and automotive uses.
Source: Ballard
|
| |
PALLADIUM SUPPLY AND DEMAND |
| (000 oz) |
2011 |
2010 |
| Supply |
|
|
| South Africa |
2,605 |
2,640 |
| Russia |
3,450 |
3,720 |
| North America |
945 |
590 |
| Other |
415 |
405 |
| Total supply |
7,415 |
7,355 |
|
|
|
| Demand |
|
|
|
6,120 |
5,625 |
|
(1,630) |
(1,415) |
| Jewellery* |
335 |
500 |
| Industrial* |
2,190 |
2,105 |
| Investment |
(525) |
1,060 |
| Total demand |
6,490 |
7,875 |
| Movement in stocks |
925 |
(520) |
|
|
| |
INDUSTRIAL |
| Gross industrial demand for platinum attained a new record high
of 1.925 million ounces, owing largely to growth in the glass and
petroleum industries. Gross palladium demand for industrial uses
increased by 7% to 2.19 million ounces, buoyed by chemical and
electrical applications, while rhodium’s increased use in the glass
industry boosted demand by 9%, to 175,000 ounces. |
| |
Chemical |
Platinum is used in the chemical industry in process catalysts in the manufacture of mainly bulk chemicals and silicones. Platinum demand in the chemical sector grew in 2011 on account of additions to paraxylene capacity, mainly in China. Paraxylene is used in the production of purified terephthalic acid (PTA), which is used to make a number of textiles and packaging materials.
Platinum gauze is used as a catalyst in the production of nitric acid, much of which is used in the fertiliser industry. Because most of the platinum used in the manufacture of nitric acid is not consumed in the process, annual demand consists mostly of top-up metal to replace the metal lost in process. Significant growth in demand for
platinum in the nitric acid sector thus occurs only when new
production capacity is brought on stream.
Demand for platinum in the silicone market continued to rise
strongly in 2011, driven by a steady demand for elastomers and
release liners. The platinum used in the production of silicones is lost
in the process and demand thus trends alongside actual output.
Palladium is used in PTA catalysts and the growth in consumer
demand for polyester and polyethelene terephthalate (PET) bottles
underpinned robust demand for the metal in this sector. Capacity
expansions, particularly in Asia, drove up demand for palladium by
23% in 2011, to 455,000 ounces. |
| |
Glass |
| Strong demand for liquid crystal display (LCD) glass continues to
underpin demand for platinum in the glass sector, which increased by
14% to 453,000 ounces in 2011. The strength of the LCD sector
compensated for a decline in the glass-fibre sector and for the closure
of old marble re-melt and cathode-ray tube (CRT) plants in China.
Manufacturers took advantage of lower rhodium prices in 2011 to
raise the rhodium content in platinum/rhodium alloys. This resulted in
a rise of 25% in demand for rhodium in this sector, to 85,000 ounces. |
| |
Petroleum |
| Platinum catalysts are used in the reforming and isomerisation steps
of the refining process. Palladium is used by refiners to upgrade
certain refinery feeds in a process known as hydrocracking. Losses
of metal in the processes are small and so platinum demand only
increases significantly when new expansions in capacity are
undertaken. The expansion of capacity in 2011 created additional
demand of 24% for platinum in this sector, to 210,000 ounces.
Demand was further boosted by the construction of renewable
diesel plants that use platinum catalysts. |
| |
Electrical |
| Hard disks |
Platinum is used in a cobalt alloy coating on hard disks to enhance
the magnetic qualities of the cobalt alloy, thereby enabling data to be
stored at higher densities and improving access times. All hard disks
now contain platinum in their magnetic layer. Platinum is also used in the manufacture of thermocouples, which are utilised in the glass,
steel and semiconductor industries.
After the strong growth in purchases of hard disk drives in 2010,
further expansion remained rather uncertain in 2011. Supply-chain
disruptions following the disasters in Japan, coupled with increased
demand for tablet computers, resulted in the lack of significant
growth in this sector. Tablet PCs make use of flash memory that
does not contain platinum. |
| |
Growth in the steel, glass and semiconductor industries was largely
responsible for the increase in demand for platinum and rhodium for
thermocouples in 2011.
Overall, purchases of platinum for the electrical sector are estimated
at 214,000 ounces, 3.4% higher than in 2010. |
| |
RHODIUM SUPPLY AND DEMAND |
| (000 oz) |
2011 |
2010 |
| Supply |
|
|
| South Africa |
650 |
630 |
| Russia |
70 |
70 |
| North America |
20 |
10 |
| Other |
30 |
25 |
| Total supply |
770 |
735 |
|
|
|
| Demand |
|
|
|
735 |
745 |
|
(270) |
(255) |
| Industrial* |
175 |
160 |
| Investment |
15 |
160 |
| Total demand |
655 |
650 |
| Movement in stocks |
115 |
85 |
|
| |
IRIDIUM IN THE SPOTLIGHT
Iridium demand remained at exceptional levels in 2011. Consumption
exceeded 300,000 ounces, a remarkable performance for a market in
which, prior to 2010, demand had been stable at around 100,000 ounces
for over a decade. Industrial purchases in the past two years have
exceeded primary production, and iridium has been drawn from
above-ground stocks in order to balance the market. The price of the
metal reflected these strong fundamentals, rising from a previously stable
figure of $400 per troy ounce to reach more than $1,000 per ounce, and
remaining at these elevated levels the whole of 2011.
The turnaround in iridium’s fortunes was primarily the result of purchasing
by the electrical sector, which took more than 150,000 ounces in 2011,
about 50% of global demand. The electrochemical industry also turned in
a good performance, lifting total chemical industry offtake to above
100,000 ounces with the refitting of the Chinese chlor-alkali industry,
which generated extra demand in anode coatings for membrane
electrolytic cells. Consumption in other industries remained strong: there were positive performances from the automotive sector, where iridium is used in electrodes for high-performance spark plugs; and the medical sector, where highly biocompatible platinum-iridium alloys are widely employed in devices destined for implantation in the human body.
In the electrical sector, the primary application for iridium is the fabrication
of crucibles used to grow single crystals. The most significant driver of
demand for iridium crucibles has been the flatscreen-display sector. The
backlighting for many liquid-crystal displays comes from light-emitting
diodes (LEDs) that use inorganic semi-conductor materials as their light
source. The use of LEDs in display applications has two major benefits:
they are more energy-efficient, reducing electricity consumption by as
much as 40%; and they have better performance characteristics, including
improved brightness, sharper contrast and a wider palette of colours.
As a result, LED backlighting has been widely adopted for smaller
displays such as smartphones, tablet computers and laptops. Since
2009, there has also been a rapid technology shift in the flatscreen-television
industry. In 2011, market penetration for LED-backlit TVs
more than doubled, taking some 40% of the total television market.
What part does iridium play in this? Its role is in the manufacture of
sapphire crystals, used as a substrate for growing gallium nitride, the
semi-conductor that generates blue and green light. Sapphire is
frequently produced using the Czochralski method, in which a single
crystal is “pulled” from a pool of molten salts contained in an iridium
crucible. Iridium is used for its extremely high melting point (crystal
growth requires temperatures of over 2,000°C) and resistance to
chemical attack. More than 200,000 tonnes of typical South African
platinum ore must be processed to supply the iridium by-product
needed for an iridium crucible set with a diameter of 25 centimetres
and weighing around almost 20 kilograms.
Iridium crucibles can also be used for other crystal-growing applications.
These include lithium-based crystals for surface acoustic wave filters,
which improve the performance of cellphones, satellite receivers and
other wireless communications equipment, and rare earth “scintillator”
crystals used in scanners for medical and security-screening applications.
For example, positron emission tomography scanners, increasingly used
in the diagnosis of tumours, contain crystals grown in iridium crucibles.
Purchases of iridium by the crucible sector were at exceptional levels
during 2010 and 2011, and demand is expected to moderate now that
sufficient crystal-pulling capacity is in place. However, the future for
iridium in the solid-state lighting sector remains bright. LEDs produced
using iridium also have the potential to deliver radical reductions in energy
consumption in domestic and industrial lighting. At present, LEDs
represent only a tiny proportion of the overall lighting market – no more
than 1% – but they are expected to gain market share rapidly over the
next three to four years.
There is also potential for new demand from a cutting-edge lighting
technology known as the organic light-emitting diode (OLED). This uses
specialised iridium complexes that act as phosphorescent light emitters in
the presence of an electrical current. Displays based on this technology
are rapidly gaining market share in applications such as smart phones,
tablet computers and digital cameras. OLEDs have many advantages
compared with older display technology: they have better resolution,
sharper colours, faster response and refresh times, and reduced energy
consumption. Demand for iridium for this application is small at present,
but is expected to grow very rapidly.
Source: Johnson Matthey
|
| |
| Multilayer ceramic capacitors |
Despite the move to base-metal processes, the use of palladium pastes
in multilayer ceramic capacitors (MLCCs) remains the single largest
user of palladium in the electronics sector. Thanks to palladium’s
physical properties, palladium-based MLCCs are still preferred for use
in more exacting environments such as aerospace and engine-management
systems in vehicles. Despite developments that have
enabled the miniaturisation of MLCCs and a reduction in the amount of
palladium in palladium/silver pastes used in the capacitors, rising
demand for MLCCs underpinned a rise in palladium demand in 2011.
Strong demand from the automotive sector for hybrid integrated
circuits (HICs) is also contributing to demand for palladium. As with
MLCC applications, a palladium HIC performs better in the harsh
environment found in vehicle engines. The high price differential
between palladium and gold has resulted in a shift away from gold
plating in connector applications. Because of palladium’s density,
30% less palladium than gold can be used. Significant growth is
expected from this application. |
| |
| Dental alloys |
| Platinum and palladium are used in dental alloys to provide strength
and durability in dental restorations. The recent high prices of the
metals have resulted in an acceleration of the tendency to replace
them with lower-priced ceramics and other materials such as resins.
In Japan, where the amount of palladium contained in dental alloys is
mandated by government, demand for palladium remained virtually
unchanged, at 244,000 ounces. In North America, ceramics are
gaining in popularity while the use of gold alloys is diminishing. In the
US dental industry, alloys high in gold are usually alloyed with small
amounts of platinum, while alloys low in gold consist principally of
palladium (50% to 80% of the total). The high price of gold and,
more importantly, the price differential between gold and palladium,
has encouraged a move to alloys low in gold, thereby benefiting the
offtake of palladium in this sector. Demand for palladium in the Rest
of World region is expected to increase over the next few years,
albeit off a small base, as improvements in economic circumstances
allow for better medical treatment. |
| |
| Fuel cells |
Interest in fuel-cell technology has accelerated dramatically over the
past decade due primarily to the efficiency, reliability and scaleability
of fuel cells. This was underpinned by a steady reduction in
manufacturing costs and ever increasing environmental concerns.
As fuel cells do not burn fuel, they do away with air emissions
associated with fossil-fuel-combustion generators (including carbon
monoxide, nitrous oxide and hydrocarbons). Furthermore, their
emissions of global warming-related gases, such as carbon dioxide
(CO2), are far smaller than those for electricity generated by other
means. The rising concern over CO2 has led to renewed efforts and
investment in the fuel-cell industry.
The last few years have seen an increase in shipments of fuel cells,
with growth of 40% in 2010 alone (close to 230,000 units). Most of
these fuel cells use proton-exchange membrane fuel cells, which
contain platinum.
Fuel-cell technology is growing strongly in the portable sector, where
demand has been driven by consumer electronics. Sales in methanol-powered
fuel-cell auxiliary power units have also increased
significantly: the power provided by the technology lasts longer than
that of traditional batteries and is thus proving popular for outdoor use.
Asia and the US are the prime markets at present for stationary
fuel-cell systems, from large-scale units used for the supply of
primary power, through smaller uninterruptible power-supply units,
to combined heat and power units. |
| |
PRICE COMMENTARY |
| The average price of platinum in 2011 was at $1,720, or 7% higher
than in 2010. After starting the year at $1,753, the metal gained
ground to a high of $1,887 on 22 August. The price declined over the
remainder of the year as investor sentiment responded to the
sovereign debt crisis in Europe and slowing growth in China. Platinum
ended 2011 on the year’s low of $1,354/oz. Although not immune to
the economic uncertainty, palladium held up better than platinum in
2011, losing $164 to $630 over the course of the year. It found
support in strong automobile sales in emerging markets, where
palladium is dominant in emission-control systems. Palladium
averaged $733 in 2011, which was 40% higher than in 2010. |
| |
MARKET INTELLIGENCE, DEVELOPMENT
AND BENEFICIATION |
Market intelligence, development and beneficiation are key pillars in platinum’s marketing strategy, and as the world leader in platinum production, we strive to be at the forefront of market development. Consequently, we allocate substantial resources to ensure sustainable demand from current and future uses for PGMs including strategic partnerships across the product development value chain.
Our commercial strategy relies heavily on accurate, relevant and credible market intelligence. Access to intelligence and understanding of the market is essential in the pursuit and recognition of market development risks and opportunities. We continue to develop our internal competence and our external relationships to ensure successful delivery of this pillar.
The key developmental issues differ between the created and the derived demand segments. In the created jewellery segment we continue to create and sustain the value of the brand. Industrial market development relies on identifying new applications through innovation and our approach includes a balanced portfolio of activities across the product development value chain including the use of strategic partnerships.
Anglo American Platinum Limited (Anglo American Platinum) supplies approximately 12% of its production to manufacturers in South Africa, primarily for use in auto catalysts where South Africa produces some 12% of the world supply of auto catalysts.
Anglo American Platinum’ approach to developing industrial demand for PGMs includes developing capacity in research and development for new applications and uses; facilitating the transfer of technology through strategic relationships locally and globally; and supporting commercialisation through the provision of appropriate resources.
Global application of fuel cells offers significant medium- and long-term demand growth for platinum underpinning our drive to stimulate and support growth in the fuel-cell technology sector, both globally and locally.
Anglo American Platinum’ fuel-cell strategy incorporates a major South African component working closely with the South African Government and industry participants further to develop a local industry supportive of energy provision and job creation.
The Company has identified a number of mining activities where the application of fuel-cell technology could improve energy efficiency. Identified applications are being explored within our industry to adapt or develop the technology for mining.
Anglo American Platinum has established a PGM Development Fund to invest in any enterprise using PGMs in their process or contained in their final product – fuel cells are a prime example.
The demonstration 200-kW United Technologies Corporation fuel cell continues to operate and provide reliable energy for Anglo Coal on the coal base methane field in Lephalale in South Africa.
A 150-kW platinum-based hydrogen fuel-cell was installed within close proximity to the conference of the Parties (COP17), from 28 November to 9 December 2011.
The zero-emission generator demonstrated clean energy efficiency
by generating electricity that was fed into the local grid to the
conference. The generator was based on a Dantherm Power
DBX5000 fuel-cell system, which utilises Ballard fuel-cell stacks. |
| |
MARKET OUTLOOK |
The year ahead is expected to be challenging with limited growth in
the developed world and a softening of previous growth forecasts in
emerging economies. The European debt crisis continues to create
volatility in the financial markets and the lack of clarity on how this will
be resolved continues to dampen market sentiment. This has been
reflected in the investment markets where reduced appetite for
participation in commodity markets continues to depress PGM prices.
PGM market demand growth is expected in 2012, providing a sound
base for short-term price response should investor interest return.
Overall platinum demand is expected to grow in 2012 despite the
lack of economic growth in the European market. Growth will be
driven by increased global vehicle production, including heavy duty
diesel, and ongoing tightening of emissions legislation. Jewellery
demand growth is also expected primarily in response to the
depressed platinum price. Industrial demand is unlikely to experience
the solid growth seen in 2011, which was primarily driven by platinum
demand for capacity expansions in glass and petroleum applications.
Primary supply challenges are expected to increase in 2012 with
increased risk of supply disruptions from power shortages and safety stoppages in South Africa. The ongoing constraint on capital
investment posed by low prices continues to limit South African
output growth, and 2012 may exhibit the compounding effects of
similar capital constraints in recent years. Consequently, we expect
the market surplus in 2012 to be smaller than that in 2011.
Palladium demand is expected to increase in 2012 supported by
global vehicle-production growth and tightening emissions
legislation with growth in gasoline-vehicle production in China
remaining a dominant driver. Industrial demand, dominated by the
electronics sector, is expected to remain robust in 2012. Primary
supply is also expected to be constrained by the same factors
impacting platinum production. The palladium market is therefore
expected to return to a deficit in 2012.
The rhodium market is expected to remain depressed in 2012.
Autocatalyst and new industrial demand is expected to increase
modestly. Secondary recycling continues to grow resulting in the
market remaining in a surplus. |
| |
REVIEW OF MARKETING STRATEGY |
| We have commenced a review of our marketing and commercial
strategy with a particular focus on adding value by better matching our
product offering to customer needs. Security of supply, metal quality
and product development are integral to this approach. The review will
include our customer mix, contractual terms and risk management. |
