The World Platinum Investment Council has revised its supply deficit forecast for 2016 up 16% to 16.2 mt, from 14.2 mt previously, the organization said in its second-quarter report Thursday.
Total demand for 2016 was expected to increase 2% year on year to 256.6 mt, while total mining supply was forecast to fall 3% to 240.4 mt.
Weaker than predicted total supply for full-year 2016 is largely due to a lower forecast for recycling growth forecast, which was expected to increase at 2% to 54.3 mt in 2016, the report said.
Automotive and jewelry demand are expected to be little changed, at 105.4 mt and 89.7 mt, respectively, for the full year.
While industrial demand for the 2016 is expected to slip 2% to 50.5 mt, due to lower requirements from the petroleum, electrical and glass sector, the organisation said.
Investment demand was expected to deliver the biggest gain year on year, up 15% to 10.9 mt in 2016, "as bar and coin demand remains strong and after ETF net sales tapered in the first half of the year".
Furthermore, given the revised forecast for 2016 the WPIC forecast above ground stocks to fall as much as 22% year on year to 58.3 mt. Above ground stocks have fallen in each of the past four years, according to the report, down over 55% from 2012.
For the second quarter of 2016, the WPIC showed a supply surplus of 5.9 mt, up from a deficit of 7.5 mt in the first quarter.
Total mine supply increased 22% quarter on quarter to 52.7 mt, "as production from South Africa returned to more normal levels as refining resumed after the safety related refinery stoppage in Q1".
Jewelry demand increased 3% in the second quarter to 19.3 mt, largely due to growth in Chinese and European fabricator demand. "Retail sales of jewellery in India remain strong, with demand increasing 25% year on year in Q2," the organization said.
Industrial demand grew 3% in the quarter to 12.8 mt, while total automotive demand was largely unchanged at 26.9 mt.
Investment demand declined as much as 42% from record highs in the first quarter to 2.8 mt as demand for platinum bars and coins eased, as did ETF holdings.
Spot platinum priced around $1,090/oz Thursday morning, down $7/oz from Wednesday's afternoon London Bullion Market Association Platinum Price.
