Platinum demand and price set to rally in 2015: HSBC

Labor strikes playing a role

HSBC -- the multinational banking and financial services company -- in its latest released Quarterly Metals and Mining Review heralds rise in demand and prices of Platinum during this year and in 2015.

The prices of Platinum witnessed steady fall during the past six months, falling all the way from levels as high as $1,550 per oz down to $1,420 per oz. The falling gold prices injected weakness in other precious metal class including Platinum. According to HSBC, the future does not look as gloomy, primarily due to the tightening supply from mines.

As per the HSBC report, automotive market will turn out to be the main driver for platinum demand. The recovery in European automotive production will boost the demand for Platinum. HSBC pegs the year-on-year demand growth for Platinum in 2014 at 7.4% in Europe, China and India.

The ongoing labor strikes at the South African mines have forced mining majors to rethink on their investment plans. In the likelihood of the strike extending until May, the industry may have to face a massive production loss to the tune of 750,000 oz, which could lead the market into deficit. Consequently, platinum prices are likely to zoom. Miners are increasingly focused on optimization techniques which could bring about significant cost reduction at mines, rather than investing in high-cost ounces.

HSBC forecasts 7% growth to Platinum prices over the year to average at $1,595 per oz during 2014. The bank also forecasts the prices of Platinum to rise 16% year-on-year to $1,850 per oz in 2015.

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