The global rhodium market will see a bigger deficit this year as falling supplies from South Africa outweigh lower demand from auto makers, an industry report showed on Tuesday.

The world's top platinum refiner Johnson Matthey said in its interim review the deficit in 2008 would rise to 62,000 ounces from a deficit of 34,000 ounces in 2007. The company expects to see a balanced market next year.

Johnson Matthey sees total supplies down at 748,000 ounces this year from
824,000 ounces in 2007 and demand at 810,000 ounces from 858,000.

'Global rhodium supplies have been negatively affected by the problems in
the South African mining industry,' the report said. 'Demand will shrink ... as thrifting in the autocatalyst sector starts to take effect.'

Power problems in South Africa have hit mining production this year.

Prices of rhodium, used to make autocatalysts that clean exhaust fumes and cut emissions, have fallen to about $1,500 an ounce from record levels above
$10,000 in June.

Demand from car manufacturers will drop by about 5.7 percent to 829,000 ounces with decreases in Europe, Japan and North America, because of thrifting, or using less.

'All of the major automakers have invested significant effort to reducing
their rhodium usage as the price has risen in recent years,' Johnson Matthey said.

'The impact ... is now being seen as new lower-rhodium content catalysts are being fitted to gasoline vehicles.'

Rhodium purchases will fall by the most in North America -- 222,000 ounces this year.

'The automotive sector in this region has had a rocky year with light duty vehicle production falling throughout 2008 to an estimated 11 million units,' the refiner said.

However, China, Russia and South America are still seeing firm growth in vehicle production.

'China and Russia have also introduced new, tighter emissions rules,' the
report said.

'Rhodium use will therefore rise in China and rest of the world region to
a combined 235,000 ounces (in 2008).'

Rhodium purchases in the glassmaking industry will rise to 57,000 ounces in 2008 from 52,000 ounces last year.

'Glass makers have continued to expand their manufacturing capacity in Asia this year,' Johnson Matthey said.

'However, the glass industry in Europe and North America will remain weak, with capacity being transferred to Asia. – Forbes