London - Supplies of platinum and palladium were set to rise significantly for the remainder of the year, limiting price gains for the metals, brokerage Johnson Matthey said on Monday.
"The ongoing expansion of platinum group metal mining and processing capacity in South Africa will see platinum and palladium output rise to new highs this year, in spite of the strength of the rand and the operational difficulties associated with bringing new mines into production," London-based Johnson Matthey said in a quarterly update of its Platinum Review.
Platinum prices reached their highest level for four months on Monday, boosted by buying from speculative funds and worries about South African production, analysts said.
On the London Platinum and Palladium Market, an ounce of platinum was being traded at $885 (R5 830) at the evening fixing price, against $857 late on Friday.
It was the highest level since mid-April, when platinum spiked at a 24-year zenith of $936.
Johnson Matthey said it was sticking to its forecast range of between $780 and $920 for the platinum price for the rest of 2004.
Its forecast for palladium was between $200 and $340 an ounce.
Palladium was being traded at $214 at the late fixing price on Monday, against $211 on Friday.
Johnson Matthey stuck to its earlier forecast that demand for palladium had the potential to rise faster in 2004 than last year.
"With inventories having been run down, the US auto industry is purchasing greater volumes of palladium this year than in 2003. A market for palladium jewellery is emerging in China, providing a significant boost to global demand for the metal," it added.
Meanwhile, further strong growth in European diesel car sales meant another likely record year for autocatalyst demand for platinum, the report said.
But "purchases of platinum during the first half of this year by the Chinese jewellery trade were 15 to 20 percent lower than the same period in 2003", it added.