World Platinum Market Outlook: Strong Demand Amid Near-Record-Low Supply Predictions

Platinum Quarterly Report Highlights Positive Projections Amidst Supply Challenges The…

Platinum Quarterly Report Highlights Positive Projections Amidst Supply Challenges

The latest Platinum Quarterly report released by the World Platinum Investment Council (WPIC) paints a robust outlook for the platinum market, citing strong demand projections alongside near-record-low supply predictions. The report underscores various factors contributing to the positive outlook, including automotive demand, industrial applications, and investment trends.

Encouraging Demand Projections

According to the WPIC report, platinum demand is expected to remain strong across various sectors, with automotive demand reaching a seven-year high. The increasing preference for hybrid vehicles, particularly extended range electric vehicles, is driving sustained demand for platinum group metals (PGMs) in exhaust treatment systems. Additionally, government subsidies worth over $300 billion are fueling attention towards the hydrogen economy, leading to a significant growth projection in stationary hydrogen demand.

Industrial Profile and Market Dynamics

The industrial profile for platinum remains healthy, with growing demand in sectors such as glassfibre manufacturing. The report highlights the role of platinum in lightweighting for vehicles and turbine blades for wind power generation, indicating a promising outlook for future demand. Moreover, partnerships in China have contributed to the rise in bar and coin demand, while successful promotional activities in India have spurred significant growth in platinum jewellery demand.

Supply Challenges and Market Balance

Despite encouraging demand projections, the platinum market faces supply challenges, particularly in South Africa and Russia. Factors such as restructuring announcements by South African PGM mining companies and operational challenges in Russia contribute to a forecast decrease in mined platinum supply. Recycling is also running below pre-COVID averages, further exacerbating supply constraints.

Investment Trends and Market Dynamics

Platinum exchange-traded fund (ETF) holdings have seen a first-quarter increase, with net platinum investment expected to remain positive for the second consecutive year. Bar and coin demand in North America remains above pre-pandemic levels, while China’s retail investment in platinum is forecasted to exhibit double-digit growth. However, high interest rates continue to discourage investment in non-yielding assets, contributing to a projected decrease in ETF holdings.

Outlook and Forecasts

WPIC CEO Trevor Raymond emphasized the significance of continued platinum demand growth, driven by stricter emissions legislation and increased hybrid vehicles. Despite a forecast rise in battery electric vehicles, platinum demand is bolstered by substitution for palladium and platinum’s role in the hydrogen economy. However, supply challenges present downside risks, with ongoing supply rationalization plans and recycling running below historical levels.

The latest Platinum Quarterly report highlights a positive outlook for the platinum market, with strong demand projections amidst supply challenges. Encouraging trends in automotive demand, industrial applications, and investment dynamics contribute to the optimistic forecast for platinum demand. However, supply constraints and market dynamics pose potential risks to the market balance, underscoring the need for continued monitoring and adaptation to changing conditions in the platinum industry.

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