- Total platinum supply in Q1'24 was the second lowest in our
time series, with full year 2024 also forecast to be a near-record
low
- Automotive demand at a seven-year high in both Q1'24 and
forecast full year 2024
- Jewellery demand increased 5% in Q1'24 driven by 53%
year-on-year growth in India
- Industrial demand fell from a record high in 2023, yet remains
17% above the pre-COVID average
- Investment demand set to remain positive in 2024 for second
consecutive year, supported by bar and coin demand in China
LONDON, May 13, 2024
/CNW/ -- The World Platinum Investment Council - WPIC® - today
publishes its Platinum Quarterly for the first quarter of 2024 and
a revised full year 2024 forecast.
Global platinum demand in the Q1'24 rose quarter on quarter to
1,994 koz, as an upswing in jewellery demand added to steady demand
growth in the automotive sector. Meanwhile, total platinum supply
fell to its second lowest level in our time series at 1,625 koz, as
mining and recycling supply remain depressed. This resulted in a
market deficit of 369 koz.
For the full year, total supply is expected to remain flat on
the weak levels of 2023 at 7,111 koz, with an improvement in
recycled supply (+ 5%, +85 koz year-on-year) offset by a 3%
decrease in mined supply (-147 koz to 5,468 koz). Meanwhile, demand
is projected at a robust 7,587 koz, resulting in a market deficit
of 476 koz. This marks platinum's second consecutive annual
deficit.
Recycling headwinds set to ease while mined supply challenges
remain
Global recycling supply in Q1'24 remained historically low at
390 koz, as weakness prevailed in both automotive and industrial
recycling. For full year 2024, global recycling is projected to
increase by 5% to 1,642 koz, as spent autocatalyst supplies begin
to recover. Further, a modest recovery in jewellery demand in
China is expected to filter
through to recycling supply as a result of increased use of product
sell-backs to fund new purchases.
Refined mine production rose 4% year-on-year in Q1'24 to 1,235
koz, driven primarily by a 5% year-on-year rise in South African
production. Zimbabwean output also rose 5%, while, in
North America, refined mine supply
was essentially flat. For full year 2024, however, total mined
platinum supply is forecast to decrease by 2% to 5,468 koz. South
African supply is projected to decline by 2% due to cost-driven
infrastructure closures offsetting increases from some expansion
projects, while Russian output is set to decrease significantly by
9% to a multi-decade low due to planned maintenance and the impact
of Western sanctions on business operations.
Above ground stocks are forecast to decline for the second year
in succession, with a further 12% decline to 3,620 koz, hitting a
four-year low.
Automotive platinum demand in Q1'24 at a seven-year
high
In Q1'24, platinum demand in the automotive sector increased to
832 koz, the highest figure since Q4'17, benefiting from rising
vehicle production and a greater hybrid vehicle share.
Additionally, platinum demand was bolstered by the increased use of
platinum-rich trimetallic catalysts, especially in North America where demand rose by 13%
year-on-year.
Automotive platinum demand in 2024 is expected to grow by 2% to
3,269 koz. This is due to slowing consumer demand for battery
electric vehicles (BEVs) and the continuation of growth in both
heavy-duty and hybrid vehicle numbers, alongside stricter emissions
legislation and an increase in platinum-for-palladium substitution,
which is forecast to reach 742 koz this year.
Increase in platinum jewellery demand with Indian fabrication
jumping by 53%
Global platinum jewellery demand rose by 5% to 486 koz in Q1'24,
supported by a strong increase in India and growth across most regions except
China. Indian platinum jewellery
fabrication saw a substantial jump of 53% to 59 koz, fuelled by a
nine-fold increase in exports to the US and UAE, more men's
jewellery promotion, and new store openings. Elsewhere, demand
in Europe is projected to grow by
2% to a record high, North America
is expected to see a modest gain, the bridal market is supporting
demand in Japan, and in the
depressed China market a slight
year-on-year improvement is expected. Global jewellery demand is
projected to rise by 6% (+109 koz) to reach 1,978 koz in 2024, with
India's growth matching the
increase in demand from Europe,
North America and China combined.
Industrial demand in 2024 remains robust
With the completion of capacity expansion cycles in the glass
and chemical sectors that boosted industrial demand to record highs
last year, demand is forecast to decline as expected by 15% in
2024. Nevertheless, it will be 17% above the pre-COVID average
(2013-2019) at 2,242 koz.
Chemical demand fell by 52% (-152 koz) in Q1'24 year-on-year and
is expected to fall by 33% to historical norms of 529 koz in 2024.
Similarly, glass demand, which actually increased in Q1'24 by 117%
(+95 koz), is expected to fall by 25% to 524 koz in full year 2024.
Medical sector (+3% to 299 koz) and hydrogen-based application
demand (+128% to 75 koz) are both expected to grow in 2024, while
demand from the petroleum (-1% to 156 koz), electrical (-1% to 88
koz), and other industrial sectors (0% at 571 koz) will remain
broadly similar to 2023 levels.
Second year of positive net investment in 2024
In Q1'24, global bar and coin investment dropped to 64 koz due
to sharp year-on-year declines in Japan and North
America, which offset gains in Europe and China. Platinum ETF holdings saw an overall
increase of 11 koz to 3,077 koz, with gains in Western-held funds
partially offset by declines in South
Africa.
In 2024, net platinum investment is expected to remain positive
for the second consecutive year at 99 koz. In North America, bar and coin demand remains
above pre-pandemic levels, and is expected to continue to do so for
the full year. China's retail
investment in platinum is forecast to exhibit double digit growth
to 60 koz, driven by perceptions of the metal being undervalued
relative to gold. European investment will likely stay flat due to
high interest rates. Meanwhile, platinum ETF holdings are projected
to decrease by 120 koz to 2,946 koz, as high interest rates
continue to discourage investment in non-yielding assets. The
change in Stocks Held by Exchanges (combined Nymex and TOCOM) is
expected to increase by 38%, albeit to only 20 koz.
Trevor Raymond, CEO of the
World Platinum Investment Council, commented: "For the second
consecutive year, the platinum market will post a meaningful
deficit underscored by platinum's sustained demand and supply
vulnerability amidst global economic challenges. While we currently
forecast a deficit of 476 koz, it is worth mentioning that a
revision to the bar and coin investment series, based on new field
research and information, could mean this deficit is potentially
deeper. An ongoing review by Metals Focus, the organisation which
independently supplies our data, identified the strong growth in
platinum bars manufactured and sold in China and has included bars less than 500g in
our published data. While 500g and 1kg bars are currently excluded
from demand data, sales of these larger bars in 2023 exceeded 100
koz, with signs of strong growth into 2024. Inclusion of these
investment bars in demand data would have materially increased the
published platinum market deficit.
"Platinum's significant demand in 2024 is to a large extent
predicated on continued platinum automotive demand growth. This is
despite a forecast rise in battery electric vehicles and reduction
in internal combustion engine vehicle production. Platinum demand
is bolstered by stricter emissions legislation, increased hybrid
vehicles that contain an internal combustion engine, and growth in
the substitution of platinum for palladium. It is important to note
that once platinum is substituted for palladium in specific vehicle
platforms, this demand for platinum is likely to remain constant
throughout the platform's seven-year lifecycle, even if platinum
prices rise to, or exceed, those of palladium for an extended
period.
"Meanwhile continuing challenges present downside risks to
supply into next year, not least as miners look to reassess
production plans and restructure operations to manage the negative
impact of the significant decrease in the PGM basket price on
mining profitability. It is worth noting that the effects of supply
rationalisation plans will have both a short-term downside effect
as well as severely constrain any near-term supply response to
demand growth or higher platinum prices. Meanwhile, recycling
supply continues to run well below historical levels and there are
risks to the pace of the projected recovery that could make it more
protracted, further exacerbating deficits.
"Finally, we are now seeing signs that platinum's role in the
hydrogen economy is gaining momentum, with our forecast for 2024
indicating a significant increase in demand to meaningful levels.
This year will also witness the allocation and deployment of over
US$300 billion in tax incentives and
subsidies from various governments around the world, potentially
further accelerating hydrogen's demand for platinum. Gradually,
this trend is capturing global investor interest, offering
investors a way to engage with assets associated with global
decarbonisation."
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)