Several mining industry reports have indicated that 2023 will see platinum hit by a large deficit.
The World Platinum Investment Council (WPIC) predicted a 938,000oz deficit, a 77% increase on 2023. Johnson Matthey and Consultants Metals Focus both also quoted deficits, although of differing figures owing to differences in methodologies. Other market leaders also agree that a deficit is coming.
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The key driver is said to be a combination of the ongoing high price of palladium and the subsequent increase in automakers switching to platinum.
WPIC CEO Trevor Raymond remarked that platinum is “forecast to see a meaningful and sustained period of deficit”. However, he added that: “Importantly, the core drivers of platinum’s expected 28% demand growth in 2023 are areas where the downside risks are well protected.”
Raymond cites a number of causes for this change, including automakers substituting palladium for platinum in the manufacture of catalytic converters, increases in chemical demand from China and general investment increases.
Although higher vehicle production was a cause of the 9% growth in automotive platinum demand in Q1 of 2023, the report states that the increasing platinum use per vehicle is a more prevalent reason.
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By GlobalDataPalladium has been consistently undersupplied since 2010, a result of the complexity of mining it and the political situation regarding its largest producer, Russia.
A further reason for the predicted deficit is the struggles in mining platinum from global leaders in the metal’s production.
South Africa has been beset by struggles in its platinum and palladium mining industry. Rolling blackouts and transport strikes have infringed on the world’s biggest platinum producer’s ability to both mine and export the metal.
Raymond continued: “Mine supply concerns, together with strong automotive and industrial demand for platinum, were met by a surge in physical investment demand, all of which have contributed to a widening gap between the supply of, and demand for, platinum.”
