‘Currently, platinum’s investment appeal lies in its considerable market deficit, but looking ahead, investors will also reap the benefits from a hydrogen-driven demand tailwind’
AT the beginning of 2023 a number of US-based investment gurus reckoned platinum was going to outperform in 2023. It did initially – reaching $1,125/oz in April – but then went into sharp decline to $845 by November. That was despite the prediction from the World Platinum Investment Council (WPIC) that there would be a platinum deficit of just over one million ounces in 2023 followed by a deficit of a further 353,000 oz in 2024. That one million oz deficit is the largest in the history of the metal. The reasons for the deficit, according to Raymond, are ongoing automotive and industrial demand strength coupled with constrained supply.
Throw in drops in the prices of palladium and rhodium and you have the reason why major South African platinum groups are looking at shutting down loss-making mines, further reducing supply. Recycling supply has also dropped off sharply because consumers are driving their existing cars for longer. Analyst René Hochreiter is forecasting platinum deficits out to 2035 because of falling South African supply and rising vehicle demand. One of his major themes is that automotive demand is going to remain firm because of huge problems with the planned widespread introduction of electrical vehicles which are already becoming apparent.
Then there is the issue of above-ground platinum stocks which built up during the Covid years because of lower vehicle production. Raymond points out those stocks are being reduced because of rising vehicle production meaning “we foresee a return to more typical automaker platinum buying patterns which could further tighten the market and place upward pressure on the platinum price”.
LIFE OF TREVOR
Raymond has a degree in electrical engineering from the University of the Witwatersrand as well as an MBA. He spent his early years as a consulting mechanical and electrical engineer with JCI before shifting into corporate finance and mineral economics. He then spent 14 years with Anglo American Platinum, starting off as head of investor relations and ending up as head of market intelligence and market relations before shifting to the WPIC in 2015 as its director of research. He was appointed CEO in October 2022.