15 th November 2011 www.platinum.matthey.com
DISCLAIMER Johnson Matthey PLC endeavours to ensure the accuracy of the information and materials contained within this presentation, but makes no warranty as to accuracy, completeness or suitability for any particular purpose. Johnson Matthey PLC accepts no liability whatsoever in respect of reliance placed by the user on information and materials contained in this presentation, which are utilised expressly at the user’s own risk. In particular, this presentation and the information and materials in this presentation are not, and should not be construed as, an offer to buy or sell or solicitation of an offer to buy or sell, any regulated precious metal related products or any other regulated products, securities or investments, or making any recommendation or providing any investment or other advice with respect to the purchase, sale or other disposition of, any regulated precious metal related products or any other regulated products, securities or investments including, without limitation, any advice to the effect that any precious metal related transaction is appropriate or suitable for any investment objective or financial situation of a prospective investor. A decision to invest in any regulated precious metal related products or any other regulated products, securities or investments should not be made in reliance on any of the information or materials in this presentation. Before making any investment decision, prospective investors should seek advice from their financial, legal, tax and accounting advisers, take into account their individual financial needs and circumstances and carefully consider the risks associated with such investment decisions. This presentation does not, and should not be construed as acting to, sponsor, advocate, endorse or promote any regulated precious metal related products or any other regulated products, securities or investments. www.platinum.matthey.com
Platinum www.platinum.matthey.com
Platinum: key features 2011 • Platinum market to be in surplus by 195,000 oz • Growth in supplies coming mainly from outside South Africa • Heavy duty diesel drives platinum demand in autocatalysts • Record industrial demand led by glass and petroleum refining sectors • China and India provide growth in jewellery demand • Positive investment demand once again www.platinum.matthey.com
Platinum supply and demand 2010 2011 % change ‘000 oz Supply 6,050 6,395 5.7 Gross Demand 7,905 8,080 2.2 Recycling (1,830) (1,880) 2.7 Net Demand 6,075 6,200 2.1 (25) 195 Movements in Stocks www.platinum.matthey.com
Platinum supplies to rise by 5.7% million oz Growth in supplies mainly from 7.0 6.395 6.050 outside South Africa, particularly 6.0 North America and Zimbabwe 5.0 • SA supplies to rise by 3% 4.0 • Russian supplies to be flat 3.0 • North American supplies to rise by 2.0 80% to 360,000 oz 1.0 • Zimbabwe supplies to grow by 20% 0.0 2010 2011 South Africa Russia North America Others www.platinum.matthey.com
Gross platinum demand to rise by 2.2% million oz • Platinum demand in 9.0 8.080 7.905 autocatalysts to rise to a 8.0 three-year high of 3.16 million 7.0 ounces 6.0 5.0 • Record industrial demand of 4.0 1.96 million ounces forecast 3.0 2.0 • Jewellery demand to grow 1.0 modestly 0.0 2010 2011 • Investment demand to Autocatalyst Jewellery weaken, but stay positive Industrial Investment www.platinum.matthey.com
Platinum demand: Gross autocatalyst million oz Worldwide demand for platinum 3.5 3.160 in autocatalysts to rise by 2.8%: 3.075 3.0 • European demand to soften due to 2.5 substitution by palladium 2.0 • Japanese demand affected by 1.5 March disaster 1.0 • North American demand to grow strongly led by light and heavy duty 0.5 diesel manufacture 0.0 2010 2011 • Strong growth in auto production in Europe Japan the Rest of the World region North America China Rest of the World www.platinum.matthey.com
Industrial platinum demand to rise by 11.7% million oz Industrial purchasing of platinum 2.5 to reach record highs driven by: 1.960 2.0 • New capacity in the glass 1.755 manufacturing sector 1.5 • New petroleum refining capacity 1.0 • Strong chemical and electrical demand 0.5 • New growth areas: non-road mobile machinery 0.0 2010 2011 Chemical Electrical Glass Petroleum Other www.platinum.matthey.com
Platinum jewellery demand to rise slightly million oz Gross platinum jewellery 3.0 demand to rise by 1.9% 2.465 2.420 2.5 • Demand to rise modestly in China despite competition from gold 2.0 • Demand to remain flat in Japan and 1.5 North America 1.0 • European demand to soften 0.5 • Rapid growth in India from a low base 0.0 2010 2011 Europe Japan North America China Rest of the World www.platinum.matthey.com
SGE weekly platinum trading volumes 2,000 1,900 Volume of platinum traded (kg) Platinum price ($/oz) 1,500 1,800 1,000 1,700 500 1,600 0 1,500 2010 2011 Weekly Volume (kg), peaks in response to price drops shown in red JM Average Price www.platinum.matthey.com
Platinum investment demand to fall million oz Investment demand to be 0.7 0.655 160,000 oz lower than in 2010 0.6 0.495 • Price volatility and yen strength 0.5 promotes large bar demand in Japan 0.4 • Growth in European ETF demand 0.3 bolstered by launch of new funds 0.2 • Sharp fall in demand for ETFs in North America but still positive 0.1 • Limited coin production 0.0 2010 2011 Europe Japan North America Rest of the World www.platinum.matthey.com
Platinum ETF volume 1,800 2,100 1,600 Cumulative holdings ('000 oz) 1,400 1,800 Price ($/oz) 1,200 1,000 1,500 800 600 1,200 400 200 0 900 2010 2011 ETFS ‐ London ZKB ETFS ‐ US JB iShares Source Others Price www.platinum.matthey.com
Platinum recycling to rise by 2.7% million oz • Higher volumes of platinum 1.880 2.0 1.830 recovered from end-of-life 1.8 vehicles, particularly diesels 1.6 1.4 • Jewellery recycling to reduce 1.2 overall, due to lower returns 1.0 0.8 from manufacturer and retail 0.6 stock in China 0.4 0.2 • More recycling of old 0.0 consumer jewellery pieces in 2010 2011 Japan Autocatalyst Electrical Jewellery www.platinum.matthey.com
Platinum outlook • Rate of growth in supply will depend on South Africa and Zimbabwe mining companies achieving expansion targets • Platinum to weather weak economic growth and consumer spending in 2012 due to strong demand drivers: • Automotive demand for platinum to be supported by heavy duty vehicle fleet renewals, recovery in Japanese vehicle output • Growth in electronics and non-road emissions control demand sectors • Jewellery demand to be maintained by strength of China market • Platinum will be in surplus again in 2012 but not by a significant amount www.platinum.matthey.com
Platinum price forecast: the next six months $/oz 2,000 $1,800 1,800 $1,650 1,600 $1,450 1,400 1,200 1,000 800 2009 2010 2011 www.platinum.matthey.com
Palladium www.platinum.matthey.com
Palladium: key features 2011 • Palladium market to be in surplus by 725,000 oz due to sale of Russian state stocks and negative net investment • Rise in primary mined supplies, especially in North America and Zimbabwe • Growth in autocatalyst demand for palladium due to higher output, substitution and new legislation • Strong demand for electrical goods and textiles driving palladium in industrial applications • Weaker jewellery demand www.platinum.matthey.com
Palladium supply and demand 2010 2011 % change ‘000 oz Supply 7,355 7,420 0.9 Gross Demand 9,735 8,890 (8.7) Recycling (1,850) (2,195) 18.6 Net Demand 7,885 6,695 (15.1) (530) 725 Movements in Stocks www.platinum.matthey.com
Palladium supplies to rise million oz • South African supplies to 8.0 7.420 7.355 decline slightly 7.0 • Russian primary mined 6.0 supplies to remain flat 5.0 4.0 • Russian state stock shipments 3.0 to take place, but at a lower 2.0 level than the past three years 1.0 • Growth in supplies from North 0.0 2010 2011 America and Zimbabwe South Africa Russia (Primary) Russia (Stocks) North America Others www.platinum.matthey.com
Gross palladium demand to fall by 8.7% million oz • Autocatalyst demand to rise to 12.0 5.92 million ounces 9.735 8.890 10.0 • Industrial demand to grow to 8.0 2.65 million ounces 6.0 • Jewellery demand to decline 4.0 • Investment sector to be a net 2.0 ‘supplier’ of palladium to the 0.0 2010 2011 market ‐ 2.0 Autocatalyst Jewellery Industrial Investment www.platinum.matthey.com
Gross palladium autocatalyst demand to rise by 6.0% million oz • European demand to rise due 7.0 to use in diesels and growth in 5.915 5.580 6.0 exports of (gasoline) vehicles 5.0 • Japanese demand to fall due 4.0 to disruption from disaster 3.0 • North America demand to rise 2.0 following strong H1 2011 1.0 • Growth in China due to 0.0 2010 2011 introduction of China 4 Europe Japan emissions standards North America China Rest of the World www.platinum.matthey.com
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