An industry group reports a looming platinum supply deficit as demand outpaces production due to factors like rising investment demand, jewelry, and traditional car markets using catalytic converters. The World Platinum Investment Council projects a 1-million-oz. deficit this year, with supply expected to decrease by 1% to 7.1 million oz. while demand is set to grow by 3% to 8.1 million oz.
The council anticipates a 15% increase in investor demand, driven by ETFs and metal bar and coin sales in China. Meanwhile, jewelry use is forecasted to rise by 7%, with automotive and industrial demand also expected to increase by 1%. The surge in automotive demand is attributed to a higher demand for internal combustion engine-containing vehicles.
Platinum’s demand dynamics are closely linked to the electric vehicle (EV) market, with leading automakers adjusting their EV production amid slower sales. Hybrid vehicles, which require more platinum than traditional cars, are maintaining growth to meet emissions targets.
South Africa, the top platinum producer, is expected to see a 2% decline in production this year, contributing to a global production drop of 2% to 5.5 million oz. Miners in the region have implemented cost-driven restructuring measures, leading to job cuts and reduced capital spending to enhance productivity and lower operating costs.
While the price of platinum has dipped, recycling efforts are on the rise, with global recycling projected to reach nearly 1.6 million oz. Industrial demand is also expected to increase, offsetting a decline in platinum chemical offtake due to a slowdown in China’s petrochemical industry.
Investment demand for platinum bars and coins is growing, particularly in China, with a substantial inflow into platinum ETFs. The jewelry sector is benefiting from historically high gold prices, with strong growth expected in countries like India and Japan.
Platinum’s role in transportation is expanding with the adoption of hydrogen fuel cells and charging stations in China and Europe. However, challenges remain in North America, especially in long-distance trucking, where battery-powered vehicles face infrastructure limitations.
The council’s report highlights the evolving landscape of platinum demand and supply, emphasizing the importance of industry trends, recycling efforts, and investor behavior in shaping the market dynamics of this precious metal.
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