THE platinum market is heading for another supply deficit in 2021, albeit narrower than the 1.2 million ounce deficit expected in 2020, said marketer and industry research body, the World Platinum Investment Council (WPIC).
Commenting in a third quarter report today, the WPIC said the 2020 deficit was largely informed by a heavy decline in newly mined platinum. About 400,000 oz in production was affected by Covid-19 shutdowns, but by far the biggest impact was the outage of refining capacity at the Rustenburg facilities of Anglo American Platinum (Amplats).
An explosion of a converter plant in February, caused by coal dust, was compounded by concerns over the safety of the back-up converter where there had been water ingress. Amplats decided to shut the back up unit whilst its rebuilt the damaged converter. Some 900,000 oz in production was affected.
Repairs to the back up facility were insufficient, however, because Amplats subsequently decided to shut until 2021 the plant which the WPIC said would affect 350,000 oz of supply in 2020. It estimated today that total mined supply would be 21% lower year-on-year.
The third quarter supply deficit totalled 709,000 oz following the return to production among producer, including Amplats, during the period, coupled with a strong recovery in demand, especially among automakers who buy platinum for autocatalyst production.
Assuming a recovery in mined supply in 2021, the deficit would be a narrower 224,000 oz, said the WPIC. But it detected a sea-change in demand trends that would be influential well beyond the year.
“We have now reached the point where decarbonisation and hydrogen are mentioned in the same breath, with strategies and policies being implemented to ensure the hydrogen economy will be driven forward over the next 15 years,” said Paul Wilson, CEO of WPIC.
“Platinum plays a key role in the production of green hydrogen and in fuel cells for electric vehicles. Material demand growth from this will be realised in the 5 to 10 year period.”
The WPIC forecast that in 2021 there would be a 24% annual increase in global automotive demand for platinum, equivalent to some 575,000 oz, owing to an increase in the light duty vehicle demand. This drive to increased automotive usage of platinum would be increased loadings to meet emission legislation, especially has palladium – currently used most of the platinum group metals (PGMs) in autocatalysis – established above $1,000 per ounce. This would increase appetite for substitution with the cheaper palladium.
2021 would also represent the continued resurgence of platinum in jewellery in the Chinese market. Platinum jewellery sales have fallen for seven consecutive years in China. Looking to 2021, global jewellery demand is forecast to gain 13% – some 246,000 oz – with all regions seeing double-digit growth, said the WPIC.