PLATINUM will register another supply deficit in 2024 amid a seven-year high in automotive demand and declining primary production, especially in South Africa, said the World Platinum Investment Council (WPIC).
Commenting in its first quarter report, the council forecast a supply deficit of 418,000 ounces this year. However, this is lower than the 878,000 oz deficit recorded in 2023. (The WPIC previously forecast a deficit of just over one million oz for 2023.)
Total demand surged by 25% year-on-year, reaching just over eight million oz against which total supply fell to 7,1 million oz – the second-lowest figure since 2013, surpassed only by the Covid-impacted year of 2020, the council said.
Despite the strong market fundamentals, the platinum price was disappointing in 2023 falling 9% and racking up a one-fifth decline in price on a three-year basis. The WPIC said that while range-bound trading was likely to continue, metal inventories accumulated by automakers during the Covid pandemic were nearly exhausted.
“Range-bound trading will likely continue until price breaks out of that range, but we estimate that the automaker inventory management process is close to having run its course,” said Trevor Raymond, CEO of the WPIC.
Set against a supportive demand picture, in which industrial, jewellery and investment demand would also be positive, platinum supply is expected to fall 1%. Moreover, mined supply is likely to be 3% lower largely owing to South African production cuts.
Impala Platinum said last week it would phase out 300,000 oz of annual supply over the next three years while Sibanye-Stillwater cut production 60,000 oz. In December, Anglo American Platinum (Amplats) stopped debottlenecking projects at its processing facilities and at Amandelbult, a mine in the Limpopo province.
These cuts were driven by significant declines in the rand prices of both palladium (down about 40% last year) and rhodium (down 69%). Continued substitution of palladium with platinum would continue to pressure primary mined supply, said the WPIC.
“The economics of mine supply are under threat following the significant decline in the prices of palladium and rhodium, with some supply rationalisation plans already announced,” said Raymond. “The short-term downside impact on mine supply remains uncertain, but any reduction also severely constrains any near-term supply response to demand growth or higher platinum prices.”
Northam Platinum CEO Paul Dunne said on March 1 the PGM market was under enormous pressure. “We anticipate the depressed pricing environment will continue over the next 12 to 24 months, placing significant pressure on earnings and cash generation across the PGM mining sector,” said Dunne.
Primary supply of PGMs would fall by two million ounces a year by 2030 to a total of four million oz at current prices, he said.
