Platinum Group Metals demand, prices likely to remain high this year
After resurgent demand pushed the platinum market into deficit in 2019, with the total volume of platinum under investment coming in at a record 3.4-million ounces at the start of this year, speciality chemicals company Johnson Matthey says the platinum market could move back into surplus this year unless investor appetites are sustained.
Last year, more than one-million platinum ounces were added to exchange-traded fund holdings, outweighing a contraction in global industrial and automotive demand, as well as a double-digit drop in the Chinese platinum jewellery market.
Johnson Matthey notes in its latest ‘Platinum Group Metals (PGM) Market’ report that demand for platinum this year will be supported by rising PGM loadings on heavy-duty trucks in China and India, where stricter emissions legislation is due to be implemented.
However, it notes that this will be offset by a further erosion in platinum jewellery demand and a drop in purchases by the glass sector.
“With weaker primary supplies balanced by further growth in autocatalyst recycling, investment will again be the primary factor which determines the direction of market balance.”
Platinum supplies in 2020 could fall below six-million ounces for the first time in six years, reflecting the impact of ongoing rationalisation programmes in South Africa, a lower contribution from the release of excess pipeline stocks and the depletion of PGM-rich surface materials that have supported PGMs output at Norilsk Nickel’s operations in recent years.
Johnson Matthey explains that while autocatalyst recycling is expected to rise again this year, it will, at best, offset the decline in primary supplies.
Recent growth in platinum recoveries reflects the dramatic expansion in platinum use in diesel catalysts that occurred between 2000 and 2007.
Platinum consumption in light-duty vehicles peaked at around 3.5-million ounces in 2006 and 2007, but fell steeply during the global financial crisis in 2008; thereafter demand was also affected by falling diesel vehicle registrations and increased use of palladium in diesel catalyst systems.
Platinum recycling volumes are expected to reach a plateau in the next few years.
Combined platinum demand in the autocatalyst, industrial and jewellery sectors is not expected to change much this year. On balance, Johnson Matthey believes combined demand in these “consuming” applications is more likely to fall than to rise, but this will depend on factors such as vehicle production volumes and the timing of industrial platinum purchases for new chemical, glass and petroleum refining plants.
“In the light-duty diesel market, production volumes will be the principal factor determining the direction of platinum demand,” Johnson Matthey notes.
THE CASE FOR PALLADIUM
All-time highs were recorded in the palladium price last year as the market deficit widened to more than one-million ounces – demand reached an all-time high of 9.7-million ounces, despite demand for palladium falling in industrial applications.