Platinum: Medium Term Forecast and Market Trends

Platinum: Medium Term Forecast and Market Trends

The platinum market is likely to be in deficit for the next five years as production from mines and from recycling fail to meet demand. As a result, prices are likely to be driven higher over the medium term.

Those are the broad conclusions of a new report written by David Jollie of Glaux Metal, and published by the World Platinum Investment Council.

The report estimates that annual global supply of platinum was 7.8 million ounces in 2015, of which South Africa accounted for 58%, other countries (particularly Zimbabwe) 18%, and recycling 24%. As for demand, the automotive industry accounted for 44%, jewellery 32%, industrial use 20%, and investment 4%.

The report sees no realistic likelihood of South African mine supply increasing meaningfully over the next six years, partly due to increasing inefficiencies at old mines, but also due to constraints on power and water availability and labour. There is potential for Zimbabwe to increase production, but this potential is compromised by the political and operating environment. Elsewhere, platinum is often produced as a biproduct of palladium or nickel, but with prices of both those metals in sharp decline, production has also fallen.

Recycled platinum (mostly from end of life vehicles) has been stable in recent years, although the report expects that it will increase: platinum use by the automotive sector peaked in 2007 and, taking into account the average life of vehicles, recycled platinum from this peak usage is expected to start flowing back onto the market over the next six years.

In terms of demand, much will depend on the health of the diesel automotive sector (since platinum is used in almost all diesel fueled vehicles). Jewellery demand is expected to be prompted over the medium and long term by increased Chinese usage.

Demand for platinum as an investment has grown in recent years following the launch of Exchange Traded Funds in Europe and similar products in South Africa. But the report suggests that investment demand over the medium term is uncertain.

A full copy of the report is attached below. For more information, please contact Marcus Grubb, Director of Market Development, World Platinum Investment Council. mgrubb@platinuminvestment.com

 

 

 

 

 

Platinum Supply and Demand-1