Platinum demand grows 26% in Q1 on global economic recovery

There are four core segments of platinum demand: automotive, industrial, jewellery and investment demand

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  • Global platinum demand increased to 1.969 million ounces
  • An annual deficit of 158,000 ounces expected this year
  • Platinum demand in the automotive sector to rise above pre-pandemic levels

As the global economy continues to recover, underpinned by widespread stimulus measures, the January-March period (Q1’21) saw demand for platinum increased by 26% (+405 koz) year-on-year to 1,969 koz, the World Platinum Investment Council (WPIC) said in its latest quarterly report.

The report released on Monday showed that for the fourth consecutive quarter, platinum deficit reached 19 koz, as strong industrial, automotive and jewellery demand and sustained investment demand for the metal outstripped constrained supply.

WPIC said that it expects platinum will see an annual deficit of 158 koz this year, marking its third consecutive annual deficit as demand continues to outstrip supply.

Meanwhile, following the effects of operational shutdowns and COVID restrictions in 2020, greater output from South Africa -the world’s largest platinum producer, an increase from Russia and growth in recycling saw total supply growing 11% (+187 koz) to 1,950 koz in Q1’21.  

While total supply is forecast to rise 16% to 7,883 koz in 2021, this is still some way off levels seen pre-pandemic (8,219 koz in 2019).  

Platinum supplies are forecast to increase by 16% in 2021 to 7.88 million ounces, while demand will grow 5% to 8.04-million ounces.

Looking at platinum’s industrial market, WPIC said overall industrial demand in Q1’21 was 44% (+201 koz) higher than in Q1’20 underpinned by a six-fold increase in demand year-on-year from the glass sector to 279 koz.

“Glass demand is forecast to increase 70% in the next year, as demand growth for use in screens and building materials is met by capacity expansions, mainly in China,” WPIC said.

“Glass demand is forecast to increase 70% in the next year, as demand growth for use in screens and building materials is met by capacity expansions, mainly in China,” WPIC said.

Platinum is a critical metal in catalytic converts in diesel-powered vehicles used to reduce harmful greenhouse gases. The report noted that they expect platinum demand in the automotive sector to rise above pre-pandemic levels.

Platinum automotive demand increased by 8% (+50 koz) in Q1’21 despite production being undermined by semiconductor shortages and a tightening of lockdown measures in some regions.

According to the report, overall investment demand increased to 140 koz, up 96% (+69 koz) year-over-year.

“ETF holdings grew for the fourth consecutive quarter in Q1’21, as anticipated substitution gains in autocatalysts and platinum’s use in hydrogen technologies continued to attract investor interest,” the report said.

The WPIC also reported an increase in the platinum jewellery market.

“In 2021, platinum jewellery is expected to recover, growing 9% above the prior year to 1,978 koz, and close to 2019’s levels (2,099 koz), with improvements particularly in the North American, European, and Indian markets,” the report said.

Paul Wilson, CEO of the World Platinum Investment Council commented: “In the previous Platinum Quarterly we saw the wheels of the global economy beginning to turn steadily as vaccination rates escalated and once-in-a-generation fiscal stimulus packages were implemented. This quarter, we now see growing momentum and economies shifting through the gears.  However, there continue to be setbacks and we may see further tragic twists and turns in how the global pandemic is resolved, adding caution to any optimism.

“Today’s report points to the fact that platinum demand and supply sectors are poised to benefit from this rapid recovery and support. In addition to stimulus packages, climate action is now heavily featured on many governments’ agendas, adding further impetus to the attraction of green technology metals such as platinum. Manufacturing sectors gaining momentum will increase platinum consumption, and in turn, this will stimulate investment activity – for both short- and long-term investors.

“The recent interest in commodities, as well as platinum’s linkage to the hydrogen economy, is driving a number of investors to consider platinum, who had not previously considered it. When these investors take a closer look, they see that platinum’s constrained supply, deep discount to gold and palladium and compelling demand growth potential greatly enhance the likelihood of investment demand growth.”

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