The World Platinum Investment Council (WPIC) released a quarterly report on Wednesday, revealing that the global demand for platinum is projected to experience a significant surge this year. As a result, it is anticipated that 2023 will witness the largest annual deficit for the metal in history.
Edward Sterck, the WPIC’s Director of Research, highlighted that a combination of stagnant supply and robust year-on-year demand growth is driving this forecasted deficit of over 1 million ounces in global platinum supply.
The report estimates that total platinum demand will increase by 27% this year, reaching approximately 8.23 million ounces. Conversely, total supplies are anticipated to remain largely unchanged from the previous year, sitting at around 7.224 million ounces.
According to the press release issued by the WPIC, the platinum market is expected to face a deficit of 1.005 million ounces in 2023, marking not only the largest deficit in terms of absolute ounces but also as a percentage of annual demand. It is worth noting that the market experienced supply surpluses in both 2021 and 2022.
Sterck pointed out that the electricity shortage in South Africa has contributed to the reduction in mine supply. Additionally, the report emphasized that strong year-on-year demand growth in the automotive and industrial sectors has played a significant role in fostering continued positive investment demand.
The report predicts a 13% increase in demand from the automotive sector compared to last year, with figures estimated to reach 3.28 million ounces. Meanwhile, industrial demand is forecasted to grow by 14%, amounting to approximately 2.67 million ounces.
Overall, these projections indicate a promising year for the platinum market, with heightened demand and a notable deficit paving the way for potentially profitable opportunities.
Increased Demand for Platinum Driven by Vehicle Production and Investment
According to a recent report, the demand for platinum has been on the rise due to increased vehicle production. It is predicted that global light-duty vehicle and heavy-duty vehicle production will grow by 6% and 7% respectively. This has led to a substitution of platinum for palladium and higher platinum group metal loadings in automotive platinum demand. Loadings are defined as the quantity of metal used in an emissions-control system.
Investment in platinum bars and coins is also expected to see a significant increase of 45% from last year, reaching a total of 326,000 ounces. This surge in investment can be attributed to the positive investment demand resulting from a switch from investors selling in Japan previously. Bars and coins are popular among consumers as they are easily understood and can be conveniently stored.
The price of platinum futures on Comex has also been rising steadily. In April, the most-active platinum futures settled as high as $1,138.70 an ounce. As of Tuesday, they are trading 13.8% higher year to date, with platinum for October delivery settling at $933.50 an ounce.
Looking ahead, green hydrogen is expected to be the most important end market for platinum. Platinum catalysts play a crucial role in proton exchange membrane electrolysers used for producing green hydrogen, as well as in fuel cells that recombine green hydrogen with atmospheric oxygen to produce water and electricity. Hydrogen is projected to be a key energy vector for global decarbonization, albeit from a small base.
The World Platinum Investment Council estimates that up to a third of platinum demand will come from green hydrogen by the late 2030s. This highlights the growing significance of green hydrogen as an alternative energy solution and the potential impact it will have on the platinum market.
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