Platinum Market Deficit Forecast Widens on Weak Supply, Sustained Demand
WPIC said it is expecting total supply to fall in 2024 by 1% to 7.11 million ounces
The forecast deficit for the platinum market has widened for 2024, as weak supply is outweighed by sustained demand from the automotive and industrial sectors.
The precious metal is now forecast for a market deficit of 476,000 ounces in 2024—from prior expectations given in March of 418,000 ounces—amid strained supply from the mining sector and resilient demand, according to a new report from the World Platinum Investment Council.
“The upfront takeaway is that this is the second year of a material market deficit in a row,” Edward Sterck, director of research at WPIC, said in a call.
Overall, WPIC said it is expecting total supply to fall in 2024 by 1% to 7.11 million ounces. This slip is largely expected to be driven by lower mine supply, weighed down by restructuring plans, closures and slower-than-expected production ramp-ups in South Africa, and Russian sanctions and planned smelter maintenance.
Meanwhile, demand is forecast to slip by 5% in 2024 to 7.59 million ounces, though this remains above the five-year average. Growth in automotive and jewelry markets is likely to be offset by weaker investment and particularly industrial demand, according to the WPIC.
“We see further risks to supply, but more importantly, we see demand staying sustained, with some upside from the automotive industry accelerating the withdrawal of above ground stocks of platinum,” Sterck said.
Mine supply is expected to be 3% lower on year, underpinned by lower output from South Africa and Russia, with refined production expected at 5.47 million ounces for 2024. Recycling rates are projected to improve 5% to 1.64 million ounces as spent autocatalyst supplies begin to recover and Chinese jewelry demand improves, though this remains significantly lower than historical norms.
The drop in recycling rates in 2023 reflects a shortage of both scrap jewelry and end-of-life vehicles, as cash-squeezed consumers drive vehicles for longer, as well as stricter regulations in North America and China. The metal is used in the catalytic converters fitted to combustion-engine vehicles, to remove some pollutants from exhaust fumes.
“I think we have hit the trough, in terms of recycling rates. The question is, how long it will take to properly recover,” Sterck said.
On the flip side, automotive platinum demand rose to 832,000 ounces in the first quarter of 2024, the highest figure since 2017, benefiting from rising vehicle production and an increased share of the hybrid-vehicle market. For the full year, the automotive industry demand for platinum is projected to grow 2% to 3.27 million ounces.
“We will see a transition to electric vehicles, but the question is when. We’ve had the early adopters, but the pace is slowing as the next group of consumers need cheaper battery vehicles,” Sterck said. “But many people are willing to accept partial electrification, like hybrid cars, keeping platinum demand high,” he added.
Industrial demand hit a record in 2023, rising 12% on year to 2.63 million ounces. While this is expected to pull back to 2.24 million ounces in 2024, the forecast figure is still 17% above the prepandemic average.