- Supply forecast to weaken further, falling 1% to 7,089 koz
in 2024, 6% below the 5-year average, while total demand now
expected to grow 3% to 8,118 koz
- Investment demand of 517 koz forecast for the year,
boosted by ETF inflows and strong growth in bar and coin demand in
China, especially in the large
bullion bar category (500g and above, now included in demand
figures)
- A jump in jewellery demand in Q2'24 contributes to overall
7% increase for the year in this segment
- Automotive and industrial demand both forecast to increase 1%
in 2024, from already elevated levels
LONDON, Sept. 10,
2024 /PRNewswire/ -- The World Platinum Investment
Council – WPIC® – today publishes its Platinum Quarterly for the
second quarter of 2024 and a revised full year 2024 forecast.
Global platinum demand in Q2'24 rose 13% year-on-year to 2,421
koz. This increase was driven by robust growth in the investment
(+137% year-on-year) and jewellery (+5%) sectors, complementing
stable demand from the automotive and industrial segments. On the
supply side, despite growth in mine production and a stabilisation
in secondary supply, total global supply, at 1,958 koz, fell well
short of demand, resulting in a 464 koz deficit.
For the full year, total platinum supply is expected to decline
by 1% from the already weak levels of 2023, reaching 7,089 koz.
While recycled supply is forecast to see a modest year-on-year
increase of 2% to 1,581 koz, this gain will be offset by a 2%
year-on-year decrease in mined supply, which is projected to drop
to 5,508 koz. On the demand side, robust growth is expected to
drive total demand to 8,118 koz, leading to a substantial market
deficit of 1,028 koz in 2024.
Investment demand projected to reach 517 koz in 2024
It is important to note that, for the first time, the Q2'24
Platinum Quarterly report includes an expanded scope that accounts
for purchases of bullion bars, 500g and above, in China, made possible by access to more
granular market data. In Q2'24, these purchases doubled from Q2'23
levels, reaching 41 koz, and are expected to achieve 40%
year-on-year growth for full year 2024, reaching 188 koz.
During Q2'24 investment demand surged to its highest level since
Q3'20, driven by a substantial inflow of 444 koz into platinum
ETFs. This strong ETF performance, along with large bar (500g and
above) demand in China, more than
offset a sharp 63% decline in bar and coin investment, which fell
to 17 koz due to net disinvestment in Japan and reduced buying in North America. Exchange-held stocks decreased
by 40 koz to 174 koz.
Total investment demand in 2024 is projected to reach 517 koz,
marking a 15% year-on-year increase. Platinum ETF holdings are
expected to increase by 150 oz (albeit a reduction on the inflows
seen during Q2'24). Strong growth in physical investment in
China, especially in the large bar
(500g and above) category, will more than offset weak bar and coin
demand elsewhere.
Platinum jewellery demand set to increase 7% driven by high
gold prices
This quarter, global platinum jewellery demand surpassed 500 koz
for the first time since Q4'21, marking a 5% year-on-year increase,
aided by the widening price gap between platinum and gold. Platinum
jewellery fabrication in India
surged 15% year-on-year, fuelled by strong exports to the US, UK,
and UAE, while fabrication in Europe and China increased 7% and 5%, respectively.
For full year 2024, historically high gold prices will help
platinum jewellery demand grow by a projected 7% (+126 koz)
year-on-year, reaching 1,994 koz. In India, jewellery fabrication is expected to
demonstrate further strong growth with a 28% increase, while
Japan's demand is forecast to rise
by 8% year-on-year to 365 koz, the highest level since 2019.
Offtake in Europe is expected to
reach a record high in our time-series, growing 4%. Meanwhile,
demand in North America this year
is also projected to reach a record high, growing 3%. Notably,
fabrication in China is set to
improve by 3%, reversing a decline in demand that has persisted
since 2013.
Robust industrial demand boosted by 47% increase in glass
demand
Industrial demand is forecast to reach 2,369 koz in 2024,
marking a 1% year-on-year increase over the elevated levels of
2023. Glass demand in Q2 2024 increased by 48% year-on-year to 216
koz, due to Chinese LCD capacity expansions that were delayed from
2023. As a result, a 47% year-on-year increase in glass demand is
expected for full year 2024.
Demand in the medical sector (+4% to 303 koz) and for
hydrogen-based applications (+123% to 64 koz) is projected to rise
year-on-year in 2024. Meanwhile, petroleum demand will soften (-3%
to 153 koz), while electrical (+1% to 90 koz), and other industrial
sectors (+2% to 582 koz) are expected to show modest year-on-year
growth.
Overall, gains will offset a sharp decline in platinum chemical
offtake, which dropped 48% year-on-year (-111 koz) to 122 koz in
Q2'24, primarily due to a slowdown in China's petrochemical industry. For the full
year, chemical demand is expected to decrease by 31%, to 542
koz.
Automotive demand to increase 1% in 2024, despite fall in
vehicle production
In Q2'24, global automotive platinum demand increased by 1% (+6
koz) to 820 koz, driven by a higher share of hybrid vehicles and
the expanded use of platinum-rich trimetallic catalysts,
particularly in North America.
Automotive platinum demand in 2024 is forecast to reach a
seven-year high, growing by 1% year-on-year to 3,237 koz, despite a
downward revision in global vehicle production estimates to 91.1
million units. This growth continues to be underpinned by softer
consumer demand for battery electric vehicles (BEVs) and the
continuation of growth in hybrid vehicle numbers, alongside
stricter emissions legislation and an increase in
platinum-for-palladium substitution, which is forecast to reach 752
koz this year.
Total supply in 2024 to fall a further 1%, despite 4% pickup
in Q2
Refined mine supply in Q2'24 saw a 4% year-on-year increase,
reaching 1,540 koz, thanks largely to a 7% increase in output from
South Africa, offsetting declines
in other regions.
However, for full year 2024, cost-driven restructuring in
South Africa is expected to result
in a 2% year-on-year reduction in the country's mined supply, which
is forecast to fall to 3,883 koz. This, coupled with forecast
declines in Russian output, is expected to lead to a 2% decrease in
total mined platinum supply, falling to 5,508 koz, a four-year
low.
Meanwhile, global recycling remained supressed in Q2'24, with
only a 1% year-on-year increase (+4 koz), driven by a slight rise
in spent autocatalyst recycling, offsetting declines in jewellery
and electronic scrap. Recycling is expected to reach 1,581 koz for
the full year, a 2% year-on-year increase, with the spent
autocatalyst market expected to show some signs of stabilising
after two years of declines, supported by improvements in the
factors that previously disrupted the flow of materials from
consumers to scrapyards and from scrapyards to refiners.
Finally, above ground stocks are forecast to decline for the
second year in succession, with a 25% decline to 3,006 koz, hitting
a four-year low and resulting in just over four months' worth of
demand cover.
Trevor Raymond, CEO of the
World Platinum Investment Council, commented: "2024 will be the
second consecutive year where the platinum market will experience a
significant deficit, driven by robust demand and ongoing supply
vulnerabilities. However, even with deficits of this magnitude, the
platinum price appears unresponsive. For a long time, price setting
has been influenced more by sentiment than by supply/demand
fundamentals. Arguably, one of the key factors driving sentiment
has been expectations of a continued and inevitable decline in
automotive demand for platinum in the wake of Dieselgate, in
combination with expectations of a rapid electrification of the
global drivetrain. As things stand, while Dieselgate has led to a
dramatic decline in diesel passenger vehicle production, growing
substitution of platinum into gasoline catalytic converters,
coupled with much slower than anticipated electrification, means
that automotive demand for platinum is now well above pre-Covid
levels. Drivetrain electrification is expected to continue to slow,
and with increasing hybridisation of the drivetrain, we see
sentiment shifting toward higher-for-longer automotive platinum
demand. We expect this shift in sentiment, supported by consecutive
deficits that are rapidly depleting above ground stocks, will
result in platinum's strong underlying fundamentals playing a more
prominent role in establishing its market value.
"WPIC's market development activities, including the annual
Shanghai Platinum Week, and growing number of product partners in
China have been instrumental in
achieving the significant growth in investment demand in that
region. This area of demand, which has been growing for several
years, from 31 koz in 2019 to 186 koz in 2023 and is now fully
included in our published demand data, is making a significant
contribution to the overall market deficit and is poised for
further growth. Notably, combining coin and both small and large
bars in China, overall demand is
forecast to surge by an impressive 34% this year.
"The relevance of platinum's growing role in the hydrogen
economy remains as strong as ever. Our forecast for 2024 predicts a
significant increase in demand, albeit off a small base, but
demonstrating the momentum in the industry. The ongoing allocation
and deployment of over US$300 billion
in tax incentives and subsidies from governments worldwide continue
to support and potentially accelerate platinum demand in the
hydrogen sector. This trend is steadily capturing the attention of
global investors, offering a compelling opportunity to engage with
assets connected to global decarbonisation efforts."
Disclaimer
Neither the World Platinum Investment Council nor Metals Focus
is authorised by any regulatory authority to give investment
advice. Nothing within this document is intended or should be
construed as investment advice or offering to sell or advising to
buy any securities or financial instruments and appropriate
professional advice should always be sought before making any
investment. For further information, please visit
www.platinuminvestment.com.
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SOURCE World Platinum Investment Council (WPIC)