The global platinum market will move to a deficit this year as demand rises sharply while supply growth faces constraints, and it is likely to remain so for several years, according to the World Platinum Investment Council (WPIC).
Overall, the WPIC anticipates a deficit of 556,000oz in 2023. This compares with a global surplus of 776,000oz in 2022.
"This year's forecast deficit is unlikely to be a one-off […] with challenges to supply expected to continue and future demand growth, supported by the needs of the hydrogen economy, likely to result in deficits continuing for a number of years," the WPIC said today.
Total platinum supply was down by 12pc year on year at 7.23mn oz in 2022, reflecting a drop in both mined output — in South Africa in Russia — and recycling. Supply is forecast to recover slightly this year, by 3pc to 7.43mn oz, but volumes will remain constrained as many of last year's challenges persist.
In particular, South African miming firms continue to navigate electricity supply issues and Russian producers face sanctions-related operating challenges. Recycling of autocatalysts slowed last year because vehicles are typically being driven for longer — and were simply driven less during Covid-19 lockdowns — but is likely to rise by 12pc year on year in 2023 to generate 1.4mn oz of platinum
Meanwhile, the WPIC expects global platinum demand to rise by 24pc year on year to 7.99mn oz in 2023.
All key consuming sectors are expected to contribute to this growth, with demand from the automotive industry set to increase by 10pc this year to 3.25mn oz, industrial demand to rise by 12pc to 2.5mn oz — its highest year on record thanks to new LCD capacity installations in Asia — jewellery demand to rise by 2pc to 1.94mn oz, and investment demand to double to 450,000oz.
The automotive industry's growing use of platinum has stemmed from multiple factors. First, increased manufacturing of hybrid vehicles that require higher platinum loadings in the aftertreatment system. Second, tighter emissions legislation — especially in China — that has also resulted in higher loadings, particularly in heavy-duty diesel vehicles. And last, the ongoing trend for platinum/palladium substitution.
With regard to hydrogen-related applications, platinum demand is still relatively small, but it is expected to grow "substantially" in the medium term.
Questions continue to hang over China's platinum imports, which have risen sharply since 2021 — far in excess of identified demand. Much of this volume has not been captured by the WPIC's published data and its likely impact on future market dynamics is unclear.
"Whether [China's high imports] will reflect actual demand — as we are seeing with the glass capacity expansions in 2023 identified in today's report — or stock held in China, it may not be available to re-enter western markets to address the deficit in 2023 due to domestic export controls, and so will lead to further market tightening," the WPIC said.
