London 18/05/2016 - The PGM's fundamentals will remain robust this year despite depressed spot prices, Justin Froneman, senior vice president of Sibanye, said.
The industry anticipates a recovery in prices over the medium-to-long term, he said during Platinum Week here, with substantial industry-wide cuts to capex and production already announced in response to unsustainable rand PGM basket price this year, he said.
As well, South African supply is unlikely to return to pre-crisis levels and limited year-on-year global producer supply growth is anticipated from 2016 onwards.
Despite concerns about the evolution of the auto market, sales volumes continue to surprise on the upside and absolute diesel-engine volumes are likely to increase, Froneman said.
"Diesel's demise is being exaggerated," he said.
Car giant Volkswagen admitted rigging diesel engines to evade emissions tests and Mitsubishi Motors manipulated test data to overstate the fuel efficiency of 625,000 cars.
Other manufacturers have also reviewed their internal emissions certification processes while Mercedes Benz parent company Daimler has started an investigation into its emissions testing at the request of the US Department of Justice.
PGM prices headwinds may, however, persist over the near term, Froneman also said. The impact of limited trading liquidity, excess above-ground PGM stocks and ETF volatility on price remain difficult to quantify.
"[But] deficit drawdowns and working capital cycle underpin should see an accelerated normalisation of this stock," he said.
(Editing by Mark Shaw)