Analysts at UBS said
in a report they now predict an average platinum price of $1,160 an
ounce in 2015, compared to $1,280 previously.
They also revised down yearly price forecasts for succeeding years by an average of 10%.
UBS now estimates a 2015 average palladium price of $770 an ounce, compared to $850 previously. The bank made downward revisions to price expectations up until 2018, but shifter the 2019 average price forecast to $920 from $850.
The price forecast for rhodium for this year was cut to $1,030 from $1,383.
For platinum, UBS now predicts a narrower supply deficit of 354,000 ounces for 2015, compared to an estimate of 744,000 ounces previously.
Despite supply disruptions in South Africa last year, the lack of evidence of market tightness signals that there is more metal than previously thought.
“That platinum has been under pressure rightly reflects the need to make these fundamental adjustments,” UBS notes.
Analysts consider that in spite of disappointing price action over the last couple of years, they believe in platinum's "core fundamental story in the medium to long term."
"In spite of the downgrades to our forecasts, we maintain an increasing price profile with the view that platinum should recover from currently depressed levels.”
For palladium, UBS said it looks for narrower deficits than previously estimated.
“Palladium’s core fundamental story remains intact," however, adjustments need to be made in terms of the magnitude and the pace of the expected price gains, the bank said.
Palladium prices have risen as much as 470% from the lows printed
in 2008 to the highs above $900 reached last year.
"The general uptrend can be justified by fundamentals. However, the palladium market is relatively small and liquidity can often become an issue; this suggests that investor positioning is naturally prone to becoming overextended relatively quickly and price action can easily be overdone.”
