SA platinum supply to fall 2% in 2024, says WPIC

PLATINUM was heading for another supply deficit this year calculated…

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PLATINUM was heading for another supply deficit this year calculated by the World Platinum Investment Council (WPIC) at 476,000 ounces. The metal recorded a 878,000 oz deficit in 2023, the WPIC said in March.

Falling mine supply was the main reason for this year’s deficit forecast, largely owing to South Africa where supply was forecast to fall 2% following restructuring of lossmaking mines. Production stoppages due to maintenance and amid sanctioning of parts supplies would result in a 9% decline in Russian production this year.

All in all, total platinum supply is expected to remain flat at 7.1 million oz. An improvement in recycled supply will be offset by a 3% decrease in mined supply, down 147,000 oz to a total of 5,47 million oz.

Meanwhile, total demand for 2024 is forecast at 7.59 million oz owing to automotive demand growth. First quarter platinum demand from carmakers increased to 832,000 oz – the highest level since the fourth quarter of 2017. An increase in hybrid vehicles over electric vehicles was a driving factor.

Automotive platinum demand in 2024 is expected to grow 2% to 3.27 million oz owing to “slowing consumer demand for battery electric vehicles and the continuation of growth in both heavy-duty and hybrid vehicle numbers”.

Commenting in the WPIC’s first quarter review, its CEO Trevor Raymond said “rationalisation” of production would “severely constrain” the ability of miners to respond to significant improved demand or higher platinum prices.

The year-to-date platinum price has gained a modest 1.85% but over the past three months the price of the metal is nearly 16% stronger.

Production and projects in platinum group metals (PGMs) have been cut or slowed this year by Anglo American Platinum, Impala Platinum, Northam Platinum and Sibanye-Stillwater amid operating losses.

Sibanye-Stillwater reported a 72% decline in Ebitda for the first quarter of R2.1bn ($113m). First quarter Ebitda of the group’s South African PGM operations fell $314m year-on-year to $77m. In February, Sibanye-Stillwater said it would retrench 852 full time employees and contractors at its South African PGM mines.

Commenting on longer term prospects, Raymond said there was continuing downside supply risk “… not least as miners look to reassess production plans and restructure operations to manage the negative impact of the significant decrease in the PGM basket price on mining profitability”.

Johnson Matthey described a similar scenario for platinum in a report last week characterised by falling supply and robust demand growth. It added that platinum markets were expected to remain in deficit until 2028.

Raymond also said there were gradual improvements in global investor interest platinum’s role in hydrogen technology amid an expected $300bn in public sector tax incentives and subsidies.

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