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Platinum market deficit to expand sharply in 2018 - WPIC

* Platinum market deficit seen at 275,000 oz next year

* Autocatalyst demand to shrink 1 percent

* Jewellery usage to rise for first time since 2014

LONDON, Nov 21 (Reuters) - The global platinum market deficit will rise sharply next year thanks to resurgent demand from the jewellery and industrial sectors and declining production, an industry report said on Tuesday. The shortfall will jump to 275,000 ounces from an expected 15,000 ounces this year, the World Platinum Investment Council (WPIC) said in its latest Platinum Quarterly report. That would put the industry in deficit for a sixth consecutive year and cut above-ground stocks to 1.605 million ounces by the end of next year, said the WPIC, which is funded "For five years these stocks have been feeding deficits ... it does appear the platinum market is much tighter than it's ever been in the last five or six years," said the WPIC's head of research Trevor Raymond. Platinum prices have risen 5 percent this year after hitting a more than seven-year low in 2016, but lagged palladium , which is up 45 percent. In September palladium became more expensive than platinum for the first time since 2001. Both metals are used in the vehicle industry for emissions-cutting catalytic converters but platinum is used more in diesel engines which have fallen out of favour following the Volkswagen emissions scandal in 2015. Platinum use in autocatalysts, which accounts for more than 40 percent of platinum demand, will fall 1 percent in both 2017 and 2018, the WPIC forecast. Overall, the WPIC said platinum demand would rise 2 percent to 8.030 million ounces next year after falling 6 percent in 2017 to 7.845 ounces. Double digit growth in India and a stable market in China is expected to drive jewellery usage up 3 percent next year, the first rise since 2014, while a rebound in demand from the petroleum and glass sectors is projected to raise industrial usage by 9 percent. The WPIC said output would fall 1 percent in 2017 and 2018, with production in South Africa, which accounts for more than half of total supply, falling 2 percent next year due to mine closures. Years of low capital investment mean output will stay low, said Raymond. "Decline is likely to continue and more importantly the ability to increase output is extremely low. It takes a lot of time to get output to increase."

PLATINUM SUPPLY/DEMAND ('000 oz)* Q3 2017 Q2 2017 Q3 2016 2017(f) 2018(f)

Mine supply 1,485 1,625 1,515 5,970 5,855 Recycling 480 480 510 1,860 1,900 TOTAL SUPPLY 1,965 2,105 2,025 7,830 7,755 Automotive demand 785 850 780 3,365 3,335 Jewellery demand 625 625 650 2,590 2,655 Industrial demand 385 405 460 1,640 1,790 Investment -10 90 50 250 250 TOTAL DEMAND 1,785 1,970 1,940 7,845 8,030 Balance 180 135 85 -15 -275 Above-ground 1,880 1,605

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* Source: World Platinum Investment Council, Platinum Quarterly Q3 2017

(Reporting by Peter Hobson; Editing by Mark Potter)