Platinum to move into deficit in 2023 as supply constraints weigh on miners

PLATINUM would record a long-anticipated deficit in 2023 as demand from automakers rebounded and supply from South African primary production remained constrained.

Supply from Nornickel might also decline owing to a lack of spare parts availability, said Edward Sterck, head of research at the World Platinum Investment Council (WPIC). “The risk is on the downside. If machinery breaks, there’s a real chance Nornickel won’t be able to find replacement parts,” said Sterck referring to sanctions on the Russian firm.

Commenting in its third quarter update on Tuesday, the council anticipated a supply deficit of 303,000 ounces in platinum next year. Assuming this deficit for 2023, it would represent a 1.1 million oz turnaround in platinum’s fortunes compared to 2022 where a surplus of 804,000 oz is anticipated by WPIC.

The 2022 surplus forecast is 17% lower than a previous estimate by WPIC. The variance was owing to an uptick in loadshedding in South Africa which affected industrial activity. In addition, Anglo American Platinum (Amplats) announced in September that it would rebuild its Polokwane smelter. The rebuild led to an adjustment in Amplats’ full year production forecast which it said would come in at between 3.7 to 3.9 million oz for the year compared to four to 4.4 million oz guided by the producer previously.

South African loadshedding (rotational power cuts by the government-owned power utility) represents an uncertain future supply risk as Eskom recently increased its anticipated loadshedding schedule to higher levels of outages for the remainder of 2022 and 2023.

Overall, global third quarter supply of platinum fell 171,000 oz. Production from South Africa fell 18%. Sterck said that estimates loadshedding had affected just over 100,000 oz in production were “probably accurate”.

Global mine supply in 2022 is forecast to contract by 9% (-567 koz) year-on-year to 5.64 million oz, about 7% lower than pre-pandemic 2019 levels.

From a demand perspective, platinum’s outlook is favourably supported by continued volumes into China – some 1.2 million oz – “above identified demand”. This refers to metal volumes that are yet to be incorporated into the council’s data.

Most promising of all in terms of platinum demand comes from the automaking industry, however. There is evidence of continued substitution of palladium with platinum, while supply logjams – including a much publicised shortage of microprocessing chips that led to reduced vehicle production – were also easing.

On balance it looked as if the semi-conductor chip shortage was easing, especially into 2023, said Sterck.

“Platinum’s resilience reflects growing automotive demand mainly due to increased substitution and higher loadings, and already committed industrial capacity additions,” said Trevor Raymond, CEO of the WPIC. “This puts platinum in a somewhat unique position versus other commodities in that demand is forecast to continue to grow, despite the recessionary outlook.”


  1. If a widely anticipated global recession materialises, the demand side of these forecasts may prove to be optimistic. The car buying public is faced with soaring accommodation costs (rising interest rates), high energy costs and rampant food inflation….. Would you be buying big ticket discretionary items in such circumstances (new cars)? If PGM prices do well in that environment, it will be the first time in almost 50 years I have seen it. Moreover, much is made of the hydrogen economy. This may well be a significant source of PGM demand….. but when? Certainly not in the next few years. Looking at past data, the peak to peak PGM price cycle varies in wavelength between about 10 and 15 years. The last peak occurred in May 2021. Will it be different this time? Personally I doubt it. Indeed, with the rapidly growing market for battery electric vehicles, which do not require PGMs, it might be argued that PGM demand has entered a secular down-trend.

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