Platinum deficit to reach 1.2 moz in 2020 – WPIC

  • This will mark a second consecutive year of deficit
  • Platinum production took a hit as Covid-19 hampered operations in key regions
  • Refined production in Zimbabwe grew by 4% year-on-year

HARARE – World platinum market is now projected to be in a significant deficit this year, as the updated 2020 forecast now signals a record annual deficit of -1,202 koz compared to the prior estimate of a -336 koz deficit just two months ago, the World Platinum Investment Council’s (WPIC) said in a latest quarterly report.

This will mark a second consecutive year of deficit compared with an 89 koz deficit in 2019,  while for 2021, the initial forecast shows the platinum market in deficit for a third consecutive year of more than 200,000 ounces.

Platinum production took a hit as Covid-19 lockdowns hampered operations in key regions including Southern Africa over the course of the year. Q3’20 performance was however, an improvement from the previous quarter as lockdown measures eased globally.

“Despite the strong quarter-on-quarter recovery in mine and recycle supply, the stellar rebound in automotive demand and sustained strong investment demand for precious metals, including platinum, lifted Q3’20 platinum demand well above supply,” the WPIC said in a report.

The report said that the total platinum supply in Q3’20 was down by 5% from Q3’19; however, the decline is relatively modest compared to the 36% drop in Q2’20. Meanwhile, total mine supply grew by 4% in the third quarter, compared to 2019. However, mine supply is expected to fall 21% this year.

“Despite the strong recovery of supply and demand in the third quarter of 2020, when compared to the second quarter, overall weak supply and very strong investor demand were the main contributors to the -709 koz deficit in the quarter,” the report said. 

The return to production of South Africa’s mining operations from June, after COVID-19-driven lockdowns, plus the recommissioning of the Anglo American Platinum converter plant (ACP) Phase B unit, saw South African mined production rebound by 105% (+541 koz) compared to quarter two. However, volumes remained down by 6% (-66 koz) year-on-year, as mines took time to recover towards full capacity.

Global refined production fell 2% (-37 koz) year-on-year to 1,493 koz in the third quarter as declines in South Africa and North America offset growth from Russia, Zimbabwe and other regions. Refined production in Zimbabwe grew by 4% year-on-year from 455 koz in 2019 to 472 koz.

Total platinum demand in 2020 is forecast to be 7,940 koz, 5% (-410 koz) lower than in 2019 due to reduced demand in the automotive (-464 koz), jewellery (-274 koz), and industrial (-79 koz) segments. However, weakness in these demand segments is expected to be partially offset by continued strong investment demand, with investment volumes expected to be up 32% (+406 koz) to a record high of 1,659 koz.

Meanwhile, heightened global risk is expected to continue to drive investor demand for hard assets, with 2020 bar and coin demand forecast to grow by 123% to 629 koz.

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