SOUTH African platinum production recovered in May while there has also been an easing in Chinese imports of the metal.
Statistics SA data published earlier this week showed that platinum group metal production, which actually measures refined mine-gate sales (and so could include pipeline metal), increased 10.4% in the month.
This would bring “relief” to followers of PGM equities in South Africa, according to a report by RMB Morgan Stanley. Its analysts said a year-to-date decline in production had been eased to -12% from -16% year-to-date in April. The May improvement indicated that the miners were “catching up” production.
Heavy rains during the first quarter interrupted production at some PGM mines, especially Valterra Platinum’s Tumela shaft, which is part of its Amandelbult mine, near Polokwane. An estimated 300 millimetres of rain fell in a day described by CEO Craig Miller as “a one in 100,000 year event”.
Valterra could potentially report 33% lower sales in the first half of its financial year, said Adrian Hammond, an analyst for Standard Bank Group Securities in a recent note.
Ultimately, this could imply a moderation in future price increases, or a correction, especially as early indications from China indicate volumes through the Shanghai Gold Exchange have “quietened down over the past three to four weeks,” after a “very strong” March to mid-June, said RMB Morgan Stanley.
In the long run, however, global economic growth and the trajectory of physical platinum demand from China, especially for jewellery, could dictate the direction of platinum and sister metal prices.
This is according to the World Platinum Investment Council, which said on Wednesday following Shanghai Platinum Week, which ended on July 10.
“GDP growth over the next few years could be more significant in terms of reduced automotive and industrial demand,” the WPIC said. It added, though, that the strength in demand for platinum investment and jewellery products as a result of the high gold price was more impactful on market sentiment.
Forecast platinum market deficits were “entrenched” and expected to continue through 2029, the WPIC said. In May, the WPIC said that, based on first quarter data supplied by Metals Focus, platinum would run at a deficit of 966,000 ounces for 2025 compared to a deficit estimate of 848,000 oz previously.
Commenting on the impact of tariffs affecting the automotive industry, the WPIC said they were estimated to affect only 112,000 oz in demand, or 1.4% of total demand.
