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The platinum market swung into the biggest shortage since 2002 last year as supply fell to a 12-year low on strikes and stoppages in top producer South Africa, according to Johnson Matthey Plc. (JMAT) The palladium deficit was the biggest since 2000.

The platinum shortage was 375,000 ounces last year and a “slight deficit” is possible this year if investment continues to grow, London-based Johnson Matthey said today in a report. Platinum supply fell 13 percent to 5.64 million ounces, as total demand declined 0.6 percent, it said. Lower palladium sales from Russian state stockpiles and constrained output in Russia and South Africa is “a recipe for an under-supplied market” and higher prices, Johnson Matthey said.

“The supply that we see at the moment is being balanced by autocatalyst, jewelry and industrial demand,” Mark Bedford, managing director for precious metals at Johnson Matthey, said in an interview before the report. “Investment really becomes a balancing figure. If investment demand continues to be positive in 2013, I wouldn’t be surprised if we didn’t see a similar sort of deficit as the one that we saw this year.”

Both metals are mostly used in vehicle pollution-control devices and jewelry, with palladium favored mainly for gasoline-burning engines in the U.S. and Asia and platinum for diesels in Europe. Platinum holdings in exchange-traded funds expanded 11 percent this year after growing 16 percent in 2012, data compiled by Bloomberg show. Palladium ETF holdings are up 13 percent in 2013 after increasing 11 percent last year, the data show.