15 th November 2011 www.platinum.matthey.com DISCLAIMER Johnson - - PDF document

15 th november 2011
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15 th November 2011 www.platinum.matthey.com DISCLAIMER Johnson - - PDF document

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


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www.platinum.matthey.com

15th November 2011

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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

  • ther 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.

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Platinum

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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
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Platinum supply and demand

‘000 oz 2010 2011 % change 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

Movements in Stocks

(25) 195

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Platinum supplies to rise by 5.7%

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 2010 2011 South Africa Russia North America Others million oz 6.050 6.395

Growth in supplies mainly from

  • utside South Africa, particularly

North America and Zimbabwe

  • SA supplies to rise by 3%
  • Russian supplies to be flat
  • North American supplies to rise by

80% to 360,000 oz

  • Zimbabwe supplies to grow by 20%
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Gross platinum demand to rise by 2.2%

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 2010 2011 Autocatalyst Jewellery Industrial Investment million oz 7.905 8.080

  • Platinum demand in

autocatalysts to rise to a three-year high of 3.16 million

  • unces
  • Record industrial demand of

1.96 million ounces forecast

  • Jewellery demand to grow

modestly

  • Investment demand to

weaken, but stay positive

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Platinum demand: Gross autocatalyst

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2010 2011

Europe Japan North America China Rest of the World

million oz 3.075 3.160

Worldwide demand for platinum in autocatalysts to rise by 2.8%:

  • European demand to soften due to

substitution by palladium

  • Japanese demand affected by

March disaster

  • North American demand to grow

strongly led by light and heavy duty diesel manufacture

  • Strong growth in auto production in

the Rest of the World region

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Industrial platinum demand to rise by 11.7%

0.0 0.5 1.0 1.5 2.0 2.5 2010 2011

Chemical Electrical Glass Petroleum Other

million oz 1.755 1.960

Industrial purchasing of platinum to reach record highs driven by:

  • New capacity in the glass

manufacturing sector

  • New petroleum refining capacity
  • Strong chemical and electrical

demand

  • New growth areas: non-road mobile

machinery

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Platinum jewellery demand to rise slightly

0.0 0.5 1.0 1.5 2.0 2.5 3.0 2010 2011

Europe Japan North America China Rest of the World

million oz 2.420 2.465

Gross platinum jewellery demand to rise by 1.9%

  • Demand to rise modestly in China

despite competition from gold

  • Demand to remain flat in Japan and

North America

  • European demand to soften
  • Rapid growth in India from a low

base

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SGE weekly platinum trading volumes

1,500 1,600 1,700 1,800 1,900 500 1,000 1,500 2,000

Platinum price ($/oz) Volume of platinum traded (kg) Weekly Volume (kg), peaks in response to price drops shown in red JM Average Price

2010 2011

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Platinum investment demand to fall

Investment demand to be 160,000 oz lower than in 2010

  • Price volatility and yen strength

promotes large bar demand in Japan

  • Growth in European ETF demand

bolstered by launch of new funds

  • Sharp fall in demand for ETFs in

North America but still positive

  • Limited coin production

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 2010 2011

Europe Japan North America Rest of the World

million oz 0.655 0.495

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Platinum ETF volume

900 1,200 1,500 1,800 2,100 200 400 600 800 1,000 1,200 1,400 1,600 1,800 Price ($/oz) Cumulative holdings ('000 oz) ETFS‐London ZKB ETFS‐US JB iShares Source Others Price 2010 2011

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Platinum recycling to rise by 2.7%

  • Higher volumes of platinum

recovered from end-of-life vehicles, particularly diesels

  • Jewellery recycling to reduce
  • verall, due to lower returns

from manufacturer and retail stock in China

  • More recycling of old

consumer jewellery pieces in Japan

0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2010 2011

Autocatalyst Electrical Jewellery

million oz 1.830 1.880

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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

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Platinum price forecast: the next six months

$1,450 $1,650 $1,800

800 1,000 1,200 1,400 1,600 1,800 2,000 $/oz 2009 2010 2011

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Palladium

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Palladium: key features 2011

  • Palladium market to be in surplus by 725,000 oz due to sale
  • f 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
  • utput, substitution and new legislation
  • Strong demand for electrical goods and textiles driving

palladium in industrial applications

  • Weaker jewellery demand
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Palladium supply and demand

‘000 oz 2010 2011 % change 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)

Movements in Stocks

(530) 725

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Palladium supplies to rise

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 2010 2011

South Africa Russia (Primary) Russia (Stocks) North America Others

million oz 7.355 7.420

  • South African supplies to

decline slightly

  • Russian primary mined

supplies to remain flat

  • Russian state stock shipments

to take place, but at a lower level than the past three years

  • Growth in supplies from North

America and Zimbabwe

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Gross palladium demand to fall by 8.7%

‐2.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0 Autocatalyst Jewellery Industrial Investment million oz 8.890 9.735 2010 2011

  • Autocatalyst demand to rise to

5.92 million ounces

  • Industrial demand to grow to

2.65 million ounces

  • Jewellery demand to decline
  • Investment sector to be a net

‘supplier’ of palladium to the market

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Gross palladium autocatalyst demand to rise by 6.0%

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 2010 2011

Europe Japan North America China Rest of the World

million oz 5.580 5.915

  • European demand to rise due

to use in diesels and growth in exports of (gasoline) vehicles

  • Japanese demand to fall due

to disruption from disaster

  • North America demand to rise

following strong H1 2011

  • Growth in China due to

introduction of China 4 emissions standards

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Imports of European-made passenger cars to China

Johnson Matthey / China Automotive Information Net

5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 Jan Feb Mar Apr May Jun Jul Aug Sep 2010 2011 vehicles

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Industrial palladium demand to grow by 7.3%

0.0 0.5 1.0 1.5 2.0 2.5 3.0 2010 2011 Chemical Dental Electrical Other million oz 2.465 2.645

A return to pre-recession levels is forecast:

  • Downstream demand for

products driving purchases in chemical applications by 23%

  • Demand for palladium in

electronic components to remain robust

  • Dental demand to be flat
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Gross palladium jewellery demand to fall by 8.4%

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 2010 2011

Europe Japan North America China Rest of the World

million oz 0.595 0.545

  • Lower demand in China due

to:

  • Lack of effective marketing
  • Higher prices
  • Low consumer interest
  • Fewer manufacturers
  • Flat demand in Europe due to

price, lower demand in North America due to competition

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Palladium investment demand to be negative

‐0.4 ‐0.2 0.0 0.2 0.4 0.6 0.8 1.0 1.2 Europe Japan North America million oz 1.095 ‐0.215 2010 2011

Weaker investor sentiment for palladium in 2011:

  • Net liquidation in the US ETF
  • Net investment in newer

European ETFs have offset declines in the more established funds

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Palladium ETF volume

300 400 500 600 700 800 900 500 1,000 1,500 2,000 2,500 3,000 Price ($/oz) Cumulative holdings ('000 oz) ETFS‐London ZKB ETFS‐US JB iShares Source Others Price 2010 2011

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Palladium recycling to rise by 18.6%

  • Boost to palladium recovery

from autocatalysts due to:

  • Higher sales of vehicles
  • More highly loaded catalysts

entering the refining stream

  • More electronic scrap being

recycled in Europe

  • Higher jewellery recycling

from manufacturers and retailers in China

0.0 0.5 1.0 1.5 2.0 2.5 2010 2011 Autocatalyst Electrical Jewellery million oz 1.850 2.195

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Palladium outlook

  • Tighter supplies in 2012 due to lower Russian state stock sales, partly
  • ffset by higher output from South Africa
  • Auto demand growth in 2012 to be at least as strong as this year due to

greater use in diesel catalysts, and growth in vehicle output in Asia and the Americas

  • Expansion of chemical production capacity in China and robust

purchasing of electronic goods to drive industrial demand for palladium

  • Investment demand to be positive
  • Even with Russian stock sales and increased autocatalyst recycling the

palladium market is likely to be in deficit next year

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Palladium price forecast: the next six months

$500 $650 $800

150 300 450 600 750 900 $/oz 2009 2010 2011

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Rhodium

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Rhodium supply and demand

‘000 oz 2010 2011 % change Supply 734 768 4.6 Gross Demand 887 905 2.0 Recycling (241) (260) 7.9 Net Demand 646 645 0.0

Movements in Stocks

88 123

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Rhodium supplies to rise by 4.6%

100 200 300 400 500 600 700 800 900 2010 2011

South Africa Russia North America Others

'000 oz 734 768

  • Higher refined output

expected from South African producers

  • Flat supplies from Russia
  • North American producers to

ramp up to full production

  • Additional supplies from new
  • perations in Zimbabwe
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Gross rhodium demand to rise modestly

100 200 300 400 500 600 700 800 900 1,000 2010 2011

Autocatalyst Chemical Electrical Glass Other

'000 oz 887 905

  • Autocatalyst demand to

decline by 3% due to thrifting, lower gasoline share in Europe and disruption in Japan

  • 25% rise in demand for

rhodium in the glass sector due to capacity expansions in LCD and alloy switching in glass fibre manufacturing

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Rhodium autocatalyst recycling

  • Higher recycling of rhodium in

autocatalysts as more highly- loaded rhodium-containing end-of-life vehicles enter the recycling stream

  • Recovery from spent

autocatalysts, together with higher supplies, expected to keep the rhodium market in surplus

50 100 150 200 250 2010 2011 Autocatalyst '000 oz 241 260

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Rhodium outlook

  • Supplies forecast to increase in 2012 due to higher output in

South Africa and Zimbabwe. Higher recycling levels are expected

  • Return to full vehicle production in Japan will be positive for

rhodium demand in autocatalysts

  • Weaker glass demand due to less expansion in global

melting capacity. Slightly higher chemical demand predicted due to expansion

  • Rhodium market to tighten but remain in surplus
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15th November 2011