THE World Platinum Investment Council (WPIC) widened its forecast deficit of the metal for 2023 to 556,000 ounces owing to pedestrian supply growth while automotive and industrial demand would grow by a quarter.
The WPIC had previously forecast a deficit of 303,000 oz for this year.
This would be the beginning of a multi-year trend, according Trevor Raymond, CEO of the WPIC in its fourth quarter and 12 month review of 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,” said Raymond.
Raymond said operational challenges and power-related headwinds in South Africa were factored into its forecast for this year. But there was further downside from intensified power curtailments in South Africa and increased sanctioning of Russian output as the country contniued to wage war in Ukraine.
Set against this is an expected 10% increase in global automotive demand in 2023 to 3.25 million ounces as production of hybrid electric vehicles continued along with tightening emission standards on internal combustion engines, and an increase in substitution of palladium with platinum, the WPIC said.
Industrial demand for platinum would be a “stand-out strength” this year partly driven by the reopening of China’s economy following last year’s stringent Covid lockdown regime, and an increase in LCD capacity installations in Japan. Industrial demand would account for 2.51 million oz in demand, a 12% year-on-year increase, the council said.
China’s reopening would also account for improved demand for platinum in jewellery while a forecast three-year high in bar and coin investment would help drive a net increase in overall investment demand of 298,000 oz. Demand for exchange traded funds in South Africa would also increase in preference to equities.
Commenting on 2022 platinum supply, the WPIC said total mine as well as refined supply both fell 11% compared to supply in 2021.
The year-on-year decline in refined supply was almost entirely due to constaints in South Africa with output falling 24%, equal to 300,000 oz, in the fourth quarter alone as a result of smelter maintenance, operational challnges and the electricity supply issues.
Anglo American Platinum and Sibanye-Stillwater forecast declines in platinum group metal output of 5% and 15% respectively if the power curtailments of the fourth quarter were sustained this year.
Global recycling also fell last year, some 17% as a result of reduced availability of end of life vehicles and lower jewellery recycling.
All in all, the platinum market remained in a surplus of 776,000 oz last year – its second successive surplus. The emergence of a deficit in 2023 represents a 1.3 million oz swing year-on-year, the WPIC said.