Johnson Matthey Plc · LSE:JMAT
Johnson Matthey — Investor Presentation (May 2009)
39 slides from Johnson Matthey's investor presentation, May 18, 2009
Slide 1: Platinum 2009
Platinum 2009 18th May 2009 Good morning to everyone, and welcome again to Platinum 2009. As usual, I’m going to concentrate on what’s been happening in the Pt and Pd markets, and finish with a couple of slides on Rh, but anyone would like some more detail on Rh or the minor metals, we’ll be happy t
Slide 2: Platinum
Platinum Starting with platinum….. 2
Slide 3: Platinum: Key features
Platinum: Key features • Platinum market in deficit by 375,000 oz in 2008 • Supplies fall 9.5% due to range of issues in South Africa • Demand shrinks by 5.0 per cent • Automotive demand weak • Industrial demand initially resilient • Jewellery and investment activity rekindled by fall in price • Unp
Slide 4: Platinum Supply and Demand
Platinum Supply and Demand ’000 oz 2007 2008 % Supply 6,600 5,970 (9.5) Demand 6,680 6,345 (5.0) Movements in stocks (80) (375) www.platinum.matthey.com In number terms, this means : supply fell by 630k oz to 5.97m oz, whilst demand contracted by 335k oz to 6.35m oz, leaving the market in overall de
Slide 5: Platinum Supply Falls 9.5%
Platinum Supply Falls 9.5% million oz 8 • South African supplies 6.600 5.970 7 decrease to 4.53 million ounces due to wide range of 6 issues 5 • Russian supplies fall to 4 820,000 oz 3 • Supplies from elsewhere rise 2 by 5,000 oz to 620,000 oz 1 0 2007 2008 RSA Russia Other www.platinum.matthey.com
Slide 6: Platinum Demand Falls by 5.0%
Platinum Demand Falls by 5.0% million oz 8 • Total demand declines by 6.680 6.345 335,000 oz to 6.345 million oz 7 6 • Gross autocatalyst demand falls by 340,000 oz 5 • Net jewellery demand drops 4 90,000 oz to 1.365 million oz 3 • Industrial demand falls by 2 90,000 oz to 1.76 million oz 1 • Net ph
Slide 7: Platinum Demand: Autocatalyst
Platinum Demand: Autocatalyst million oz • Gross auto sector platinum 5 4.145 3.805 purchases fall by 8.2% to 3.805 million oz due to falling production 4 • US demand falls 290,000 oz 3 • Diesel sector supports European demand 2 • Demand falls in Japan but rises slightly in China 1 0 2007 2008 China
Slide 8: Platinum Demand: Autocatalyst Recycling
Platinum Demand: Autocatalyst Recycling million oz 1.2 • Recovery of platinum from spent 0.935 1.005 catalysts continued to rise to 1.0 1.005 million ounces 0.8 • North America remains biggest market 0.6 • H1 2008 remarkably strong due 0.4 to high metal prices 0.2 • H2 dramatically weaker as prices
Slide 9: Net Platinum Demand: Jewellery
Net Platinum Demand: Jewellery million oz 2.0 • Net demand for platinum fell 1.455 1.365 by 6.2% 1.5 • High prices in first half of 2008 drive global demand sharply lower 1.0 • Only China showed net growth for the year as a whole 0.5 • Recycling rises from 360,000 to 480,000 oz in Japan 0.0 2007 200
Slide 10: Platinum Demand: Japanese Jewellery
Platinum Demand: Japanese Jewellery '000 oz 600 • Recycling very strong in first 540 535 two thirds of 2008 500 • Manufacturing volumes for 400 whole year slightly down on 2007 300 • Overall: net demand strongly 200 lower 100 0 2007 2008 Net Recycling www.platinum.matthey.com So, to show this recycl
Slide 11: Platinum: sales through SGE
Platinum: sales through SGE 140 2500 120 2000 Monthly demand '000 oz 100 Pt price $/oz 1500 80 60 1000 40 500 20 0 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2008 2009 www.platinum.matthey.com I’ve talked about those first two issues : the impact on demand of volatile price an
Slide 12: Platinum Demand: Industrial
Platinum Demand: Industrial million oz 2.0 1.845 1.755 • Industrial demand falls by 4.9% to 1.76 million oz 1.5 • Impact of economic slowdown relatively limited in 2008 1.0 • Chemical and electrical industries suffer from slowdown 0.5 • More metal released from CRT glass factories 0.0 2007 2008 • Pe
Slide 13: Platinum Demand: Investment
Platinum Demand: Investment '000 oz 500 • Physical platinum investment demand rises to 425,000 oz 400 • Japanese investors buy 300 275,000 oz, despite net disinvestment in H1 200 • ETF net purchases volatile 100 and fall from 170,000 oz to 105,000 oz 0 2003 2004 2005 2006 2007 2008 -100 Coins and ba
Slide 14: Platinum Outlook
Platinum Outlook • Automotive demand remains weak but should start to recover slightly in advance of car production • Industrial demand to weaken from 2008 levels • Net jewellery demand currently very strong • Recycling remains depressed • Investment interest hard to forecast • Supply should recover
Slide 15: Platinum Outlook
Platinum Outlook • Automotive demand remains weak but should start to recover slightly in advance of car production • Industrial demand to weaken from 2008 levels • Net jewellery demand currently very strong • Recycling remains depressed • Investment interest hard to forecast • Supply should recover
Slide 16: Forecast Platinum Price: what we said in November 2008
Forecast Platinum Price: what we said in November 2008 $ per oz 2,500 2,000 1,500 $700 – 1,000 $1,400 500 J A J O J A J O J A J O 2007 2008 2009 www.platinum.matthey.com Back in November we predicted what some people may have regarded as a rather large range for the price of Pt of between $700 and $
Slide 17: Forecast Platinum Price for the Next 6 Months
Forecast Platinum Price for the Next 6 Months $ per oz 2,500 2,000 1,500 $950 – 1,000 $1,350 500 J A J O J A J O J A J O 2007 2008 2009 www.platinum.matthey.com Nevertheless, we have to make one, and this is it… A somewhat tighter range than last time. Unlike much of last year, the market now seems
Slide 18: Palladium
Palladium And so to Pd... 18
Slide 19: Palladium: Key features
Palladium: Key features • Palladium surplus decreases to 460,000 oz in 2008 • Supplies fall by 14.8 per cent on lower primary production and lower Russian stock sales • Demand rises by 0.2 per cent • Autocatalyst demand decreases in North America but rises in all other regions • Jewellery, physical
Slide 20: Palladium Supply and Demand
Palladium Supply and Demand ’000 oz 2007 2008 % Supply 8,580 7,310 (14.8) Demand 6,835 6,850 +0.2 Movements in stocks 1,745 460 www.platinum.matthey.com Looking at the numbers, supply fell by some 14.8% to a level of 7.31m oz, whilst demand remained roughly static at 6.85m oz. As a consequence, we s
Slide 21: Palladium Supply Falls by 14.8%
Palladium Supply Falls by 14.8% million oz • Supply shrinks by 1.27 million oz 10 8.580 7.310 9 • South African supply falls by 8 12.1% to 2.43 million oz 7 6 • Russian production falls by 11.5% 5 to 2.7 million oz 4 3 • Sales of Russian state stocks fall 2 1 by a third to 960,000 oz despite 0 large
Slide 22: Palladium Demand Climbs by 0.2%
Palladium Demand Climbs by 0.2% million oz • Global demand grows by 8 6.835 6.850 15,000 oz to 6.85 million oz 7 6 • Autocatalyst demand falls in 5 North America 4 • Jewellery demand rises in 3 China, North America and 2 Europe 1 • Electronics demand increases 0 2007 2008 Net auto Jlry Other • Inves
Slide 23: Palladium Demand: Autocatalyst
Palladium Demand: Autocatalyst million oz • Palladium autocatalyst 5 4.545 4.380 demand falls by 165,000 oz to 4.38 million ounces 4 • North American demand falls 3 by 350,000 oz to 1.345 million ounces 2 • Demand grows in all other 1 regions • Pd replacing Pt in diesel and in 0 gasoline 2007 2008 C
Slide 24: Pgm choice in European Autocatalysts
Pgm choice in European Autocatalysts Gasoline percentage of pgm used (Pt/Pd) 100 % 75 50 25 0 2006 2007 2008 Palladium Platinum www.platinum.matthey.com In this chart you can see the strong dominance that Pd now represents in gasoline catalysis in Europe – as I said earlier less than 100k oz of Pt w
Slide 25: Pgm choice in European Autocatalysts
Pgm choice in European Autocatalysts Gasoline Diesel percentage of pgm used (Pt/Pd) percentage of pgm used (Pt/Pd) 100 100 % % 75 75 50 50 25 25 0 0 2006 2007 2008 2006 2007 2008 Palladium Platinum Palladium Platinum www.platinum.matthey.com …, and here you can see the gradual erosion by Pd of Pt’s
Slide 26: Palladium Demand: Autocatalyst Recycling
Palladium Demand: Autocatalyst Recycling million oz 1.4 1.015 1.170 • Palladium recovery from spent autocatalysts rose to 1.17 1.2 million ounces 1.0 • Growth in every region 0.8 • North America remains largest 0.6 market 0.4 • Pd recovery now higher than Pt 0.2 • Price changes cause disruption to m
Slide 27: Palladium Demand: Jewellery
Palladium Demand: Jewellery million oz 1.0 • Chinese net palladium 0.715 0.855 purchases rise from 500,000 0.8 oz to 650,000 oz 0.6 • Recycling of old Pd950 stock in China falls 0.4 • Chinese manufacturing of palladium jewellery strong in 0.2 first three quarters of 2008 0.0 • Pd continues to establ
Slide 28: Gross Palladium Demand: Jewellery
Gross Palladium Demand: Jewellery million oz 1.2 • Gross demand up by less than 0.950 0.985 net demand 1.0 • Recycling of old stock in 0.8 China decreases 0.6 • Relatively low levels of exchange of second-hand 0.4 jewellery 0.2 • Little recycling in Europe, North America but some recovery in Japan f
Slide 29: Palladium Demand: Industrial and Dental
Palladium Demand: Industrial and Dental million oz 3.0 • Global dental demand flat at 2.330 2.385 2.5 630,000 oz 2.0 • Electronics demand rises 6.9% to 1.345 million ounces 1.5 • Chemical demand falls by 1.0 25,000 oz to 350,000 oz 0.5 0.0 2007 2008 Other industrial Electronics Dental www.platinum.m
Slide 30: Palladium Demand: Investment
Palladium Demand: Investment '000 oz 500 • Physical palladium investment demand reaches record 400 400,000 oz 300 • ETF purchases rise from 280,000 oz to 370,000 oz 200 • Demand from coins and bars 100 benefits from lack of availability of other precious 0 metal products 2003 2004 2005 2006 2007 200
Slide 31: Palladium Outlook
Palladium Outlook • Palladium autocatalyst demand to weaken again in 2009 • Industrial demand also to remain weak • Jewellery outlook unclear • Physical investment set to remain strong • Primary production likely to fall from 2008 levels • Sales of Russian state stocks likely to be required to keep
Slide 32: Forecast Palladium Price for the Next 6 Months
Forecast Palladium Price for the Next 6 Months $ per oz 600 500 400 300 200 100 J A J O J A J O J A J O 2007 2008 2009 www.platinum.matthey.com So where does that leave us ? The Pd price will inevitably be partially dependent on what happens to that of Pt as well of course to the strength of the dol
Slide 33: Forecast Palladium Price for the Next 6 Months
Forecast Palladium Price for the Next 6 Months $ per oz 600 500 400 300 $180-$280 200 100 J A J O J A J O J A J O 2007 2008 2009 www.platinum.matthey.com Our forecast for the next six months is $280 at the top end and $180 at the bottom. 33
Slide 34: Rhodium
Rhodium Finally some words on rhodium… 34
Slide 35: Rhodium: Key features
Rhodium: Key features • Supplies fall 15.7 per cent, largely due to issues in South Africa • Net demand shrinks by 18.4 per cent • Automotive demand weak • Autocatalyst recycling rises • Glass demand decreases • Rhodium market in small surplus of 6,000 oz in 2008 • Unprecedented price volatility – e
Slide 36: Rhodium Supply Falls by 15.7%
Rhodium Supply Falls by 15.7% '000 oz 1,000 • Total supplies fall from 824 824,000 oz to 695,000 oz 800 695 • South African production 600 decreases from 696,000 400 to 574,000 oz 200 • Russian and other supplies marginally down 0 2007 2008 South Africa Russia Other www.platinum.matthey.com Supplies
Slide 37: Rhodium Demand Declines by 18.4%
Rhodium Demand Declines by 18.4% '000 oz 1,000 • Total demand falls from 844 689 844,000 oz to 689,000 oz 800 • Gross autocatalyst 600 demand drops from 887,000 oz to 760,000 oz 400 • Autocatalyst recycling climbs to 205,000 oz 200 • Glass demand drops to 0 38,000 oz 2007 2008 Net Auto Glass Other w
Slide 38: Rhodium Outlook
Rhodium Outlook • Continuing thrifting and weak vehicle production to depress gross automotive demand • Automotive recycling likely to be lower than in 2008 • Dealloying process in glass industry reversing • South African rhodium supplies likely to rise • Market currently expected to remain in surpl
Slide 39: Platinum 2009
Platinum 2009 www.platinum.matthey.com End 39