Pt 2006 presentation slides - Johnson Matthey€¦ · Sales of diesels continue to grow. Platinum...

Platinum Platinum 20062006

15th May 200615th May 2006

www.platinum.matthey.com

Platinum DemandPlatinum Demand

• Total demand up 2% to6.70 million oz

• Record demand from the autocatalyst sector

• Jewellery purchases fall to less than 2 million oz

• Glass and electrical uses push industrial demand to new high0

1

2

3

4

5

6

7

2004 2005

Auto (net) Jlry Ind.

million oz

6.54 6.70


Platinum Demand: AutocatalystPlatinum Demand: AutocatalystUp 9% to 3.82 million ozUp 9% to 3.82 million oz

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2004 2005

million oz

RoW

N.America

Japan

Europe

3.49

3.82


Platinum Demand: AutocatalystPlatinum Demand: AutocatalystEurope: up 17% to 1.96 million ozEurope: up 17% to 1.96 million oz

Euro IV regulations

Increasing fitment of CSF

Sales of diesels continue to grow


Platinum Demand: Autocatalyst Platinum Demand: Autocatalyst Europe: 1997Europe: 1997--20052005

0

50

100

150

200

250

300

1997 1998 1999 2000 2001 2002 2003 2004 2005

1997 = 100

0

500

1,000

1,500

2,000'000 oz

Diesel demand for Pt Av LDD loading

Euro III

Euro IV


Platinum Demand: Autocatalyst Platinum Demand: Autocatalyst

North America: up 2.5% to 820,000 ozNorth America: up 2.5% to 820,000 oz

Japan: down 3% to 595,000 ozJapan: down 3% to 595,000 oz

China + RoW: up 13% to 445,000 ozChina + RoW: up 13% to 445,000 oz

Higher HDD demand and increased vehicle output but no stock build

Vehicle production up, tighter emissions limits

HDD retrofit, changes in market share


Platinum Demand: Jewellery Platinum Demand: Jewellery Down 9% to 1.96 million ozDown 9% to 1.96 million oz

0.0

0.5

1.0

1.5

2.0

2004 2005

million oz

RoW

Europe

N.America

Japan

China

2.16

1.96


Jewellery Demand: China Jewellery Demand: China Down 13% to 875,000 ozDown 13% to 875,000 oz

• High metal financing costs, price volatile

• Destocking & recycling by the trade increases

• Retail sales affected by less choice, higher prices

• Lower costs, greater margins on palladium & WG

• Inauspicious year for weddings: total bridal jewellery sales fall


Jewellery Demand: Elsewhere Jewellery Demand: Elsewhere Platinum price affects demandPlatinum price affects demand

North America: down 5% to 275,000 ozNorth America: down 5% to 275,000 oz

Japan: down 9% to 510,000 ozJapan: down 9% to 510,000 ozRecycling up, stocks downConsumers trading in old jewellery

Europe: unchanged at 195,000 ozEurope: unchanged at 195,000 oz


Platinum Demand: IndustrialPlatinum Demand: IndustrialUp 9% to 1.675 million ozUp 9% to 1.675 million oz

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2004 2005

million oz

Petroleum

Glass

Electrical

Chemical

Other

1.5351.675


Platinum Demand: IndustrialPlatinum Demand: IndustrialDriven by LCD glass and hard disksDriven by LCD glass and hard disks

Glass demand up 22% to 355,000 ozGlass demand up 22% to 355,000 ozConstruction of LCD glass furnaces in Asia continued at rapid pace

Electrical demand up 20% to 360,000 ozElectrical demand up 20% to 360,000 ozSoaring sales of consumer products containing hard disks


Platinum Demand: 1996 vs. 2005Platinum Demand: 1996 vs. 2005Autocatalyst demand doubledAutocatalyst demand doubled

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

1996 2005

million oz

Other

Glass

Electrical

Jewellery

Autocat(net)

4.96

6.70


Platinum SupplyPlatinum SupplyUp 2% to 6.63 million ozUp 2% to 6.63 million oz

0

1

2

3

4

5

6

7

2004 2005

Other

N.America

Russia

S.Africa

million oz

6.49 6.63


Platinum Supply: South AfricaPlatinum Supply: South AfricaUp 2% to 5.11 million ozUp 2% to 5.11 million oz

• Pipeline stocks increase at Anglo Platinum

• Progress on Eastern Bushveld still slow

• More difficult conditions at some older Western Bushveld mines


Platinum Supply ElsewherePlatinum Supply Elsewherenet change: +40,000 oznet change: +40,000 oz

Russia: up 8% to 890,000 ozRussia: up 8% to 890,000 ozPipeline release at Norilsk Nickel in H2

North America: down 6% to 360,000 ozNorth America: down 6% to 360,000 ozMinor changes at Falco, NaPd, Inco

Zimbabwe: up 6% to 155,000 ozZimbabwe: up 6% to 155,000 ozPolitical/economic uncertainties increase


Platinum Supply and DemandPlatinum Supply and Demand

(70)(50)Movements in stocks

+26,6306,490Supply

+26,7006,540Demand

%%2005200520042004’000 oz


Platinum Outlook: JewelleryPlatinum Outlook: JewelleryTrade discomfort growing as price rises

1.0

1.5

2.0

2.5

3.0

'97 '98 '99 '00 '01 '02 '03 '04 '05 '06

million oz

300

400

500

600

700

800

900

1,000

1,100$ per ozJewellery Demand Av. Price

?


Platinum Outlook: JewelleryPlatinum Outlook: JewelleryChinese purchases lagging last year

Cumulative year-to-date platinum sales on the SGE

0

1

2

3

4

5

6

7

8'000 kg

2005 2006Week

1Week

17


Platinum Outlook: AutocatalystPlatinum Outlook: AutocatalystFurther growth certainFurther growth certain

Euro IV plus CSF in EuropeHDD regulations in North America

Rising light vehicle outputTightening emissions limits

•• DieselsDiesels

•• AsiaAsia


Platinum Outlook: SupplyPlatinum Outlook: SupplySouth Africa remains key to growthSouth Africa remains key to growth

• Pipeline release due from Anglo Platinum

• Higher output expected from both new and established mines

• Only minor increases from Zimbabwe and N. America


Platinum Outlook: PricePlatinum Outlook: PriceSwimming with the commodities tideSwimming with the commodities tide

Indexed US$ commodity prices, Jan '05-May '06

75

100

125

150

175

200

225

250

275

300

Jan Mar May Jul Sep Nov Jan Mar May

4th Jan 2005= 100

Brent crude Zn Cu Au Pt


Platinum Outlook: PricePlatinum Outlook: PriceForecast For The Next 6 MonthsForecast For The Next 6 Months


800

900

1,000

1,100

1,200

1,300

1,400

J M M J S N J M M J S N

$ per oz

2005 2006

$1,025–$1,250

Forecast set


Palladium DemandPalladium Demand

• Total demand grows 7% to 7.04 million oz

• Autocatalyst demand mixed – up in Asia, down in USA & Europe

• Jewellery becomes the second largest application

• Industrial & investment demand increases0

1

2

3

4

5

6

7

2004 2005Auto (net) JlryElec. Other

million oz

6.567.04


Palladium Demand: Autocatalyst Palladium Demand: Autocatalyst Up marginally to 3.81 million ozUp marginally to 3.81 million oz

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2004 2005

million oz

RoW

Japan

N.America

Europe

3.79 3.81


Autocatalyst Demand for Palladium Autocatalyst Demand for Palladium

Japan: up 4% to 660,000 ozJapan: up 4% to 660,000 ozHigher vehicle output, lower emissions

North America: down 1% to 1.43 million ozNorth America: down 1% to 1.43 million ozThrifting, lower production of SUVs / light trucks

Europe: down 10% to 990,000 ozEurope: down 10% to 990,000 ozThrifting plus lower gasoline vehicle output

China + RoW: up 21% to 705,000 ozChina + RoW: up 21% to 705,000 ozRising vehicle production, tighter emissions limits

Increased substitution of platinum


Palladium Demand: Jewellery Palladium Demand: Jewellery Up 54% to 1.43 million ozUp 54% to 1.43 million oz

Pd jewellery elsewhere

WG & Pt alloys

Pd jewellery in China


Palladium Demand: Jewellery Palladium Demand: Jewellery Chinese purchases jump to 1.2 million ozChinese purchases jump to 1.2 million oz

• Retailers like:– inexpensive to stock, greater margins– lower price = higher sales

• Pd 990 increasingly stocked alongside Pd 950

• Wholesale and retail stocks continue to grow as Pd market penetration spreads

• Manufacturers like:– low metal funding costs, less volatile price– lower density = higher productivity


Palladium Demand: Jewellery Palladium Demand: Jewellery Chinese retail sales developChinese retail sales develop

–Purity: Pd 990

–Affordability

–Whiteness

–Association with Pt

–Good investment?

0

50

100

150

200

250

300

350

400

Pt Pd

Typical Retail Price

Gross Margin

RMB / gram

• Consumers like:


Palladium Demand: OtherPalladium Demand: OtherUp 2.5% to 2.43 million ozUp 2.5% to 2.43 million oz

0.0

0.5

1.0

1.5

2.0

2.5

2004 2005

million oz

Other

Chemical

Dental

Electronics

2.37 2.43


Palladium Demand: 1996 vs. 2005Palladium Demand: 1996 vs. 2005A market transformedA market transformed

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

1996 2005

million oz

Chemicals& Other

Dental

Jewellery

Electronics

Autocat(net)

6.15

7.04


Palladium SupplyPalladium SupplyDown 2% to 8.39 million ozDown 2% to 8.39 million oz

0

1

2

3

4

5

6

7

8

9

2004 2005

million oz

Other

N. America

Russia

South Africa

8.58 8.39


Palladium Supply: RussiaPalladium Supply: RussiaDown 4% to 4.62 million ozDown 4% to 4.62 million oz

• Norilsk Nickel releases data: production of 3.13 million oz

• Substantial sales from State stocks

at the end of the year

• Stillwater sells 439,000 oz of Russian metal


Palladium Supply ElsewherePalladium Supply Elsewhere

South Africa: up 4% to 2.59 million ozSouth Africa: up 4% to 2.59 million oz• Production increasing in line with platinum output

North America: down 13% to 905,000 ozNorth America: down 13% to 905,000 oz• Difficult year for North American Palladium:

low grades, mill problems, recoveries drop


Palladium Supply and DemandPalladium Supply and Demand

1,3502,020Movements in stocks

-28,3908,580Supply

+77,0406,560Demand

%%2005200520042004’000 oz


Palladium Outlook: AutocatalystPalladium Outlook: AutocatalystStronger growth forecastStronger growth forecast

• Rising light vehicle production and tightening emissions limits in Asia

• Thrifting to have less impact

• Further switching from Pt to Pd in gasoline vehicle catalysts

• Pd in diesel after-treatment to make a small contribution


Palladium Outlook: Jewellery Palladium Outlook: Jewellery Retail sales vs. metal purchasesRetail sales vs. metal purchases

– price advantage over platinum widening

• Potential for good retail sales growth in China:– first marketing campaign planned

• Several US & European manufacturers now looking at Pd

• But existing inventories may restrain growth in metal demand


Palladium Outlook: SupplyPalladium Outlook: Supply

• Stillwater sales of Russian metal completed

• Substantial shipments from Russian state stocks in Q1

• Growth expected in South African & North American mine production


Palladium Outlook: PricePalladium Outlook: PriceDonDon’’t look downt look down……

150

200

250

300

350

400

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

$ per oz

200

400

600

800

1,000

1,200'000 oz

NYMEX Net Spec. Average Price

2005 2006


Palladium Outlook: PricePalladium Outlook: PriceForecast For The Next 6 MonthsForecast For The Next 6 Months


150

200

250

300

350

400

450

J M M J S N J M M J S N

$ per oz

2005 2006

$260 – $420

Forecast set

Platinum Platinum 20062006

15th May 200615th May 2006

Pt 2006 presentation slides - Johnson Matthey€¦ · Sales of diesels continue to grow. Platinum...

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Transcript of Pt 2006 presentation slides - Johnson Matthey€¦ · Sales of diesels continue to grow. Platinum...