Platinum remains in the doldrums despite positive outlook

Platinum price is under pressure as the automotive industry grapples with the ongoing semiconductor chip shortage

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HARARE – Platinum price fell further in early Monday trades to reach US$944 per ounce as the on-demand metal continues to trade below the resistance level of US$1025 per ounce.

Notably, the depressed price performance persists despite the highly valued and desired metal used in catalytic converters, jewellery, and pacemakers among other key uses emerged bullish out of the Q2’21 report provided by the World Platinum Investment Council (WPIC) on supply and demand.

WPIC reversed its earlier outlook on supply for the metal from deficit to surplus, effectively ending the shortages experienced in the previous two years, while highlighting that demand for the industrial metal continues to grow. WPIC indicated that the roughly 8 million ounces a year market will be oversupplied by 190,000 ounces in 2021, shifting from an earlier supply forecast of a 158,000 ounces shortfall.

Decline in car production

Platinum price is under pressure as the automotive industry grapples with the ongoing semiconductor chip shortage. The scarcity has evolved from what appeared to be a short-lived problem in the year’s first half to one that will likely continue into the next year.

Top car manufacturers including Ford, General Motors, Nissan, and Toyota which had managed to resist the chip shortages for a considerable time when competitors had balked, have had to cut production, thus curbing platinum price gains.

However, WPIC in the Q2 report published last week said Automotive demand in 2021 is expected to recover by 22% (+529 Koz) above the 2020 levels, and importantly also 2% (+58 Koz) above 2019 levels, despite concerns over the ongoing impact of the global microchip shortages on vehicle production.

Demand is being boosted by platinum for palladium substitution in major European, North American, and Chinese markets.

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