Platinum 2005 · • Palladium demand climbed as substitution of platinum increased, emissions...

Platinum Platinum 20052005

16th May 200516th May 2005

www.platinum.matthey.com

Platinum Demand + 1%Platinum Demand + 1%

0

1

2

3

4

5

6

7

2003 2004

Demand

million oz

• Demand edged up to a new high of 6.58 million oz

• Strong growth from autocatalyst sector and industrial applications

• Purchases for jewellery manufacture dropped by 12 per cent


Platinum Supply + 5%Platinum Supply + 5%

0

1

2

3

4

5

6

7

2003 2004

Demand Supply

million oz

• Supplies grew more rapidly than demand, reaching 6.5 million oz

• Market moved close to balance

• Price was supported by fund investment, as well as by physical demand


Platinum Demand by Application Platinum Demand by Application Autocatalyst: +7%Autocatalyst: +7%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2003 2004

'000 oz

RoW

N.America

Japan

Europe

3,2703,510


0

250

500

750

1,000

1,250

1,500

1,750

1999 2000 2001 2002 2003 2004

'000 oz

20

25

30

35

40

45

50

55

%

Pt in Gasoline Pt in Diesel LDD market share

European Demand for Platinum in European Demand for Platinum in Autocatalysts 1999Autocatalysts 1999--20042004


Autocatalyst Demand for Platinum: Autocatalyst Demand for Platinum: Other MarketsOther Markets

North America: down 10% to 800,000 oz• Substitution by palladium in gasoline autocatalysts

Japan: up 18% to 590,000 oz• Truck manufacturers introduce models with

catalysts & particulate filters as standard equipment

Rest of the World: up 7% to 460,000 oz• Higher light vehicle production and tightening

emissions limits in Asia


Platinum Demand by Application Platinum Demand by Application Jewellery: Jewellery: --12%12%

0

400

800

1,200

1,600

2,000

2,400

2,800

2003 2004

'000 oz

RoW

Europe

N.America

Japan

China

2,510

2,200


Fall in Chinese Jewellery DemandFall in Chinese Jewellery Demanddown 19% to 1.01 million ozdown 19% to 1.01 million oz

• Increased competition from white gold and palladium in provincial cities

• Many manufacturers began production of more profitable palladium jewellery

• Inventories of platinum jewellery reduced throughout the trade

• Rising platinum price affected manufacturers’profit margins and metal financing costs

• But size of market previously underestimated, diamond-set and bridal sectors developing


Fall in Chinese Jewellery DemandFall in Chinese Jewellery Demand

160

180

200

220

240

260

280

300

A J A O D F A J A O D F A

RMB pergram

Retail Price, Shanghai

Average Pt Price

2003 2004 2005

}Manufact.

Wholesaler

Retailer

5% tax


Jewellery Demand for Platinum:Jewellery Demand for Platinum:Other MarketsOther Markets

North America: down 9% to 290,000 oz• High platinum price pressures sales at

lower end of US market

Japan: down 12% to 560,000 oz• Strong competition from white gold

• Inventory recycling persists at high rates

Europe: up 8% to 205,000 oz• Further growth in UK market plus

strong sales of Swiss watches


Platinum Demand by ApplicationPlatinum Demand by ApplicationIndustrial: +11%Industrial: +11%

0

200

400

600

800

1,000

1,200

1,400

1,600

2003 2004

'000 oz

Petroleum

Glass

Electrical

Chemical

Other

1,380

1,530


Platinum Demand by ApplicationPlatinum Demand by Application

(12)2,2002,510 Jewellery

% change% change2004200420032003’000 oz

73,5103,270 Autocatalyst: gross

9(700)(645) recovery

111,5301,380 Industrial

4015 Investment

16,5806,530TOTAL DEMAND


Platinum Supply by RegionPlatinum Supply by RegionTotal supply: +5%Total supply: +5%

0

1

2

3

4

5

6

7

2003 2004

millionoz

Other

N. America

Russia

South Africa

6.306.50


Platinum Supply by RegionPlatinum Supply by Region

South Africa: up 9% to 5.03 million oz• Output exceeds expectations; higher

production from most major producers

• Rand strength & other cost pressures cause further revisions to expansion plans

Russia: down 19% to 850,000 oz• Sales drop back to reflect mine production

North America: up 31% to 385,000 oz• Strong recovery in output at Inco


Platinum Supply and DemandPlatinum Supply and Demand

(80)(330)Movements in stocks

+56,5006,200Supply

+16,5806,530Demand

%%2004200420032003’000 oz


Platinum price price vsvs NYMEX net NYMEX net speculative positionspeculative position

January 2004 – April 2005

750

775

800

825

850

875

900

925

950

J F M A M J J A S O N D J F M A

$ per oz

-50

0

50

100

150

200

250

300

350'000 oz

Total Net Spec. Weekly Average Price

2004 2005


Palladium Demand + 22%Palladium Demand + 22%

0

1

2

3

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7

8

2003 2004Demand

million oz

•• Demand jumps to Demand jumps to 6.6 million oz 6.6 million oz

•• Autocatalyst & electronics Autocatalyst & electronics purchases improve purchases improve

•• Production of palladium Production of palladium jewellery in China jewellery in China develops rapidlydevelops rapidly


Palladium Supply + 18%Palladium Supply + 18%

0

1

2

3

4

5

6

7

8

2003 2004Demand Supply

million oz

•• Supplies surge to Supplies surge to 7.62 million oz 7.62 million oz

•• Large sales from Russian Large sales from Russian stocks; increased mine stocks; increased mine production elsewhere production elsewhere

•• Market remained heavily in Market remained heavily in surplus, price weakness surplus, price weakness persistedpersisted


Palladium Demand by Application Palladium Demand by Application Autocatalyst: +10%Autocatalyst: +10%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2003 2004

'000 oz

RoW

N.America

Japan

Europe

3,4503,810


Autocatalyst Demand for Palladium Autocatalyst Demand for Palladium

Japan: up 23% to 675,000 oz• Palladium demand climbed as substitution of

platinum increased, emissions limits tightening

North America: up 20% to 1.445 million oz• US automakers increased purchases, having run down

inventories the previous year

Europe: down 5% to 1.16 million oz• Palladium demand fell for the fourth year as

gasoline vehicle sales continued to slide


Palladium Demand by Application Palladium Demand by Application Industrial, Jewellery & Other: +39%Industrial, Jewellery & Other: +39%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2003 2004

'000 ozOther

Jewellery

Dental

Electronics

3,320

2,380


Jewellery Demand for PalladiumJewellery Demand for PalladiumPurchases climb to 920,000 oz

• Strong purchasing of metal in March/April as the jewellery trade stocked up

• Chinese manufacturers began mass producing palladium jewellery in Q1 2004

• Sales developed in second & third tier cities

• Chinese jewellery demand jumped to 700,000 oz

• Low metal funding costs an advantage; retailers enjoyed good profit margins


Palladium Demand by ApplicationPalladium Demand by Application% change% change2004200420032003’000 oz

3850825Dental

10 3,8103,450 Autocatalyst: gross

29(530)(410) recovery

6955900 Electronics

47595405Other

368920250 Jewellery

226,6005,420TOTAL DEMAND


Palladium Supply by RegionPalladium Supply by RegionTotal supply: +18%Total supply: +18%

0

1

2

3

4

5

6

7

8

2003 2004

millionoz

Other

N. America

Russia

South Africa

6.45

7.62


Palladium Supply by RegionPalladium Supply by RegionRussia: up 29% to 3.8 million oz• Norilsk mine production stable• Total includes 375,000 oz of stock sold by Stillwater • Large volume of metal shipped from State inventories

South Africa: up 8% to 2.5 million oz• Production increased in line with expanding

platinum output

North America: up 13% to 1.055 million oz• Stronger production from North American Palladium • Recovery in output at Inco


Palladium Supply and DemandPalladium Supply and Demand

1,0201,030Movements in stocks

+187,6206,450Supply

+226,6005,420Demand

%%2004200420032003’000 oz


Palladium price vs NYMEX net Palladium price vs NYMEX net speculative positionspeculative positionJanuary 2004 – April 2005

100

150

200

250

300

350

J F M A M J J A S O N D J F M A

$ per oz

0

200

400

600

800

1,000'000 oz

Total Net Spec. Average Price

2004 2005


2005 Outlook 2005 Outlook -- PlatinumPlatinum

• Market to remain close to balance

• Chinese jewellery market appears resilient, helped by less volatile price

• Diesels to drive further growth in autocatalyst demand

• Rate of growth in supplies depends on South African expansions

• Industrial consumption to remain firm


Forecast Platinum Price For The Forecast Platinum Price For The Next 6 MonthsNext 6 Months


700

750

800

850

900

950

1,000

N D J F M A M J J A S O N

$ per oz

2004 2005

$830 – $930


2005 Outlook 2005 Outlook -- PalladiumPalladium

• Market surplus expected to persist

• Direction of Chinese jewellery market unclear

• Total autocatalyst demand unlikely to change

• Mine output to expand, sales from stocks to continue

• Significant increase in autocatalyst recovery


Forecast Palladium Price For The Forecast Palladium Price For The Next 6 MonthsNext 6 Months


100

150

200

250

300

N D J F M A M J J A S O N

$ per oz

2004 2005

$160 – $230

Platinum Platinum 20052005

www.platinum.matthey.comwww.platinum.matthey.com

Platinum 2005 · • Palladium demand climbed as substitution of platinum increased, emissions...

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